Rumour mill builds on Oracle Virtual Iron buy

Rumours throughout Silicon Valley that Oracle has issued a letter of intent to purchase Virtual Iron have refused to die down.

Despite the fact that analysts have been blogging about a possible tie-up between the two since the end of February, the fact that neither firm has quashed the rumours has only added fire to the smoke signals circling around any possible plans.

Virtual Iron is a server virtualisation vendor for small and medium enterprises (SMEs) with around 2,000 customers. It is one of the few remaining relatively independent virtualisation firms left in the market after Citrix acquired XenSource in 2007, with a fifth place vendor ranking behind VMware, Xen, Microsoft and Red Hat.

Industry observers could see the potential of a tie-up between Oracle and Virtual Iron.

“It would be quite a strange move in my mind, given the fact that Oracle only launched its own OVM [Oracle Virtual Manager] product just over a year ago. But if OVM’s not working for Oracle, because it’s not necessarily got all the bells and whistles of a Virtual Iron, I can see how it may be attractive,” said Roy Illsley, Butler Group senior research analyst.

“Virtual Iron’s a really excellent product, like a VMware in miniature, so I’m surprised no one’s bought it yet.”

Serguei Beloussov, chief executive of virtualisation and automation vendor Parallels, said, “We’ve been hearing these rumours for a month now and would not be surprised if the acquisition happens.”

He claimed that Virtual Iron has spent over $50m (£36.2m) in funding, has less than $4m (£2.9m) in annualised revenues and is more than 20 times smaller than Parallels, with no significant intellectual property, which makes it a cheap acquisition target for the likes of Oracle in today’s economic climate.

Of course, it was in Beloussov’s interests to talk down the Virtual Iron threat, as he added: “If the acquisition happens, Parallels will become the only truly heterogeneous, independent virtualisation vendor.”

Neither Oracle nor Virtual Iron had responded to requests for comment at the time of writing.