* Oracle acquires Virtual Iron; Terms not disclosed
* Puts pressure on VMware, Microsoft, Citrix
* Oracle shares down 1.7 pct, VMware down 4.1 pct
By Jim Finkle
BOSTON, May 13 (Reuters) - Oracle Corp (ORCL.O) plans to
acquire privately held virtualization software maker Virtual
Iron, a move analysts said will put pressure on VMware Inc
(VMW.N), the biggest player in the rapidly growing sector.
Oracle, the world's No. 3 software maker, announced the move
on Wednesday, though it did not disclose terms of the
transaction or say when it will close.
The deal also threatens to take business away from Citrix
Systems Inc (CTXS.O) and Microsoft Corp (MSFT.O), the other two
key makers of virtualization software, help companies save money
on hardware, energy and maintenance by enabling one piece of
equipment to perform the work of multiple machines.
Market researcher Gartner estimates that sales of
virtualization software will grow 43 by percent this year to
$2.8 billion.
Analysts said Virtual Iron's technology is comparable to
that of rivals, but the company has remained small because it
has lacked marketing muscle and financing to take them on.
"Virtual Iron has a solid product," said Jefferies & Co
analyst Katherine Egbert.
Oracle, the world's biggest maker of database software, has
one of the software industry's largest sales forces and will
likely use its marketing infrastructure to sell Virtual Iron
products alongside other business software.
The company can package the products together, offering
discounts and tweaking the virtualization programs so that they
better work with Oracle's database software, middleware and
business management programs.
"If I were VMware, if I were Microsoft, if I were Citrix, I
would be concerned," said ITIC analyst Laura DiDio. "Oracle's
mentality when it comes to rivals is very simple: 'Take no
prisoners.' They are a very, very tough competitor."
Lowell, Massachusetts-based Virtual Iron's technology will
augment virtualization programs that Oracle introduced in late
2007. That software, dubbed Oracle VM, is primarily used with
computers running on the Linux operating system. It competes
with virtualization software from Red Hat Inc (RHT.N) and Novell
Inc (NOVL.O).
Virtual Iron's programs are primarily used in the far larger
segment of the virtualization software market -- machines
running on Microsoft's Windows server software, which is where
VMware dominates, followed by Microsoft and Citrix.
Redwood City, California-based Oracle is also poised to gain
other virtualization products with its planned purchase of Sun
Microsystems Inc (JAVA.O) for more than $7 billion, which it
announced last month.
Oracle shares were down 1.7 percent at $18.06 on the Nasdaq
on Wednesday afternoon. Shares of VMware were down 4.1 percent
at $26.68. Microsoft shares were down 0.6 percent at $19.77 and
Citrix was down 3.4 percent at $26.82.
(Reporting by Jim Finkle, editing by Matthew Lewis)
