Oracle is going after its piece of the hot virtualization market by introducing an open source Xen-based hypervisor to compete against those from Novell, Red Hat and VMware.
Oracle VM, unveiled at the Oracle OpenWorld convention in San Francisco, enables virtualization on Oracle and non-Oracle software applications and on the Linux and Windows operating systems. It also operates on industry-standard x86- and x86-64-based servers. Oracle claims it offers virtualization at a cost that's lower than competitors' prices.
The Oracle announcement sent VMware's stock tumbling Monday by 8.41% or US$7.38 a share, to close at US$80.36 at the end of regular trading. It fell further, to US$77.50, in after hours trading. The stock of Novell and Red Hat moved only slightly.
The hypervisor is available as a free download. Technical support, including upgrades, on servers with one or two CPUs costs US$499 per year, per system, while support for a system with unlimited CPUs costs US$999 per year, per system.
By offering Oracle VM support at lower prices, Oracle again is pursuing a strategy it revealed last year when it offered less-expensive support for the Red Hat Enterprise Linux operating system than Red Hat does. By offering a Xen-based hypervisor, just as Red Hat and Novell do, Oracle could increase its competitive pressure.
Oracle VM provisions virtual servers, manages virtual environments and moves applications from one server to another while the program remains running. "With Oracle VM, users keep doing what they're doing, whether they are running a database or running an application, they don't see any change at all. Their job just moves from one machine to another," said Chuck Rozwat, executive vice president of product development for Oracle, during a demonstration of Oracle VM at OpenWorld.
Companies like Oracle are introducing virtualization hypervisors to take some control away from the operating system over software applications in a server, says Gordon Haff, principal analyst with research firm Illuminata. But Oracle also wants to muscle in on the market share of the leading hypervisor vendor VMware.
"Just as Oracle wants to minimize the role of the [operating system], so too does it want to minimize the role of the hypervisor," Haff wrote on his blog, Illuminata Perspectives. "From the vantage of Redwood Shores, VMware is getting altogether too much attention. The easiest way to minimize the impact of the virtualization players? Offer Oracle's own hypervisor."
VMware says it welcomes Oracle's entry into the virtualization space, but its prepared statement regards Oracle as more of a partner than a competitor. "We hope this will be the first of many steps that Oracle takes towards broad enablement of virtualization,"said the statement, attributed to Parag Patel, vice president of alliances for VMware, who also said that the company seeks stronger virtualization support from Oracle, "including clear and consistent licensing guidelines for running Oracle software in virtualized environments."
The Patel statement also cast doubt on whether the virtualization market needs another Xen-based hypervisor: "There are at least five variants of Xen available to customers today. Oracle's will be the sixth," it read.
This week's annual OpenWorld, drawing an estimated 43,000 attendees, comes just a few weeks after Oracle's failed bid to acquire middleware software company BEA Systems. The BEA board rejected Oracle's US$17 a share bid for the company as too low, and Oracle rejected BEA's counteroffer of US$21 a share as too high.
Nonetheless, Oracle will continue to acquire companies it thinks will add to its array of database, middleware and enterprise software, said Charles Phillips, president of Oracle, in his keynote address. Without mentioning BEA specifically, Phillips said acquisitions bring innovation into Oracle to supplement its US$2 billion annual R&D budget.
"Acquisitions make a lot more sense. The companies are more proven, they have more customers, the products are more seasoned, and the companies are cheaper than they were during the Internet bubble," Phillips said.