Start the V wars - Oracle buys Virtual Iron

A couple weeks ago I wrote: 

While people seem to be most interested in watching how Oracle deals with Sun's hardware business, I think their decisions surrounding virtualization software are going to have much heavier implications for Oracle and the rest of the industry. If Oracle tries to force customers to use Oracle VM by witholding support for VMWare, many customers will reject Oracle's stack - which would defintely hurt sales of Solaris, Java and their core DB products. However, if Oracle does not get their own virtualization layer product, they will lose the ability to create strong synergies between that product and Solaris/Java, which would be detrimental to their software margins.

Expect changing directions and signals out of Oracle about virtualization for the next couple years while they sort it out.

Well we didn't have to wait that long, as it was announced this morning that Oracle is acquiring Virtual Iron. This could send the whole industry in a topsy turvy motion, with Larry Ellison controlling the rudder.

On paper, they now have all the software components they will need to form a complete computing stack, from applications to system hardware. The Sun deal was a shocker to be sure, but this deal shows that Oracle is thinking about bigger things than making an opportunistic deal for a fading giant - it is making a big play for industry domination and it is going to be fascinating to watch.  It will take time for Oracle to get Virtual Iron's product where it needs to be in order to be competitive with VMware's. The question is how long will that be?

The biggest players impacted by Oracle's moves today are:

Microsoft - its always about Microsoft where Oracle is concerned.  Microsoft has to succeed with Hyper-V now.  It will probably have to put a full court press on server vendors such as IBM, HP and Dell now to get the deals it needs for Hyper-V.  But those server companies need to be in bed with VMware, don't they?  Note to Steve Ballmer - do you still wonder what Oracle was up to?

VMware and EMC - VMware had been putting distance between themselves and Virtual Iron. The gap is much closer now and will likely get much closer over time. As the majority stakeholder in VMware - EMC has the most to lose financially should Oracle's virtualization product gain significant market share. Should Oracle decide to sell it's product for a lot less money - in order to stimulate sales for other products and services, the damage to VMware (and EMC by association) could be significant.

IBM and HP - IBM has mainframe virtualization and HP has none.  Their server systems could be devalued by not having virtualization and stack tie-ins. That depends on how Oracle chooses to distribute and package their virtualization product.

Cisco - This makes UCS seem much less like a future dominant technology and much more like a fascinating science experiment.  That's not to say, it won't succeed, but there's nothing like having a giant competitor all of a sudden emerge to blunt the enthusiasm.

Comments

[Storagezilla]

You missed RedHat, which adopted the Kernel-based Virtual Machine (KVM) and then bought it's developer Qumranet.

And that's the thing with Linux. It's not like the XEN based systems Larry had or bought, Oracle VM, Sun xVM and now Virtual Iron were not already at war with KVM, beloved by the Linux Kernel development team, before he bought in.

This is a complex battle all right but more akin to Unbreakable Linux Vs RedHat/Novell-SuSE and every other distro than Oracle Vs DB2 or MS SQL Server.

[nate]

I think HP does have VM technology on their big boxes see here - http://h20341.www2.hp.com/enterprise/cache/262803-0-0-0-121.html

My favorite ethernet company announced a couple new products a few days ago which look very interesting to me as well - http://www.extremenetworks.com/solutions/NGDC_splash.aspx

Just destroys the competition in the 10GigE arena as far as performance and density goes. Pricing is quite good too. Force10 just came out with their next gen 10gig in March!

You mentioned a bunch of players but didn't mention Citrix, what do you think about them? Or the linux world with KVM.

I'm a vmware fan myself of course been using it since pre 1.0, though so far I've stuck to the basics, no HA, VCB, VMotion, etc. Which has worked out pretty well I think, a lot of the complaints/bugs I hear about vmware are in the more advanced features. My HA is provided by load balancers for the most part.

Foundry/Brocade were out here last week pitching their new load balancers that were announced on Monday(very impressive too! blows the doors of everything else in the industry), they were stoked that HP/IBM signed OEM agreements to source the Foundry gear now that Cisco has gone into the server realm. They said IBM/HP account for $3 billion/year in Cisco sales, and hope to get a good chunk of that.

I don't think the Cisco dream will be realized, at least not by Cisco. If HP haven't been able to do it, and IBM hasn't been able to, they have 1000x more experience with this kind of thing. Cisco is the king of non-integration because they buy almost all of their technology instead of making it themselves. I suppose it's part of why they are as big as they are, you invest so much in learning how the stuff works that you don't want to throw that away and switch to something that's easier to manage. Job security for those network engineers out there. (I think this can easily apply to storage too!)

Last year when Foundry was out here they were pretty excited about the new Cisco OS as well, apparently it has a bunch of changes in it forcing people to learn quite a bit of new things, which in their eyes is the final nail in the list of excuses customers can use for not switching to something better.

Foundry/Brocade have really fast high quality products though they kind of pride themselves in almost mirroring the IOS interface, which makes me shudder.

Then there is Cisco's business practices, which just infuriate me. I won't buy them on ethical reasons alone, but it also doesn't hurt that the bulk of their products are pretty poor as well. Similar business practices at other big companies(looking at you EMC, HDS, NetApp..)

[marc farley]

Zilla and Nate - thanks for adding more companies to the list and for your correction about HP virtualization technology.

[Drue Reeves, Burton Group]

Nice post Marc.

Is it just me or is competition on the rise in the IT industry?

I think Oracle may be taking a slightly broader approach to management...and thinking longer-term competition. The VI acquisition gives Oracle a nice management console to compete with XenCenter, vCenter, and SC VMM. The difference being that only MSFT and Oracle have both enterprise management AND virtualization management consoles. If management is the new frontier in virtualization competition, integration with an enterprise management console seems like a must. Owning both pieces (enterprise and virtualization management) can be advantageous. Cisco and VMware are keenly aware of the issue, but lack the pieces to control all of it. Could BMC be an acquisition target?

[marc farley]

Hi Drue,

Thanks for the insights! As for BMC, I wouldn't be surprised if they were pursued - it seems to be the way the industry is working these days.

[Chris Fricke]

I never really had a lot of faith in Cisco UCS and now I have even less. Oracle has got an excellent opportunity to do some cool things but it's not going to happen overnight. I don't think their solution will ever uproot VMWare as the king but could keep Citrix/VMWare/Microsoft out of what I would call "The Oracle zone". Meaning they may not sway hoards of converts but they could end up keeping the customers they've already purchased. Time will tell.