Oracle plans to acquire privately held virtualisation-software maker Virtual Iron, a move analysts said will put pressure on VMware, the biggest player in the rapidly growing sector.
Oracle, the world's number-three software maker, announced the move on Wednesday, but did not disclose terms of the transaction or say when it will close.
The deal also threatens to take business away from Citrix and Microsoft, the other two key makers of virtualisation 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 $2.8bn.
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 virtualisation 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 virtualisation software from Red Hat and Novell.
Virtual Iron's programs are primarily used in the far larger segment of the virtualisation 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 virtualisation products with its planned purchase of Sun for more than $7bn, which it announced last month.
