News Column

Oracle Enters Network Virtualization Space With Xsigo Purchase

July 30, 2012

Jeremy C. Owens


Oracle (ORCL) announced Monday the second acquisition of a young, Silicon Valley network-virtualization company this month, following VMware's $1.3 million purchase of Palo Alto neighbor VMware by agreeing to buy San Jose-based Xsigo. Terms were not disclosed.

Xsigo, like Nicira, takes the virtualization model VMware was built on and applies it to networking, creating multiple virtual networks that work together in tandem but unleash much more computing power than a single network could ever achieve. Oracle already offers a standard server-virtualization plan, called Oracle VM, and now adds network virtualization, giving VMware a high-profile combatant in the networking, space where the traditional leader is Cisco (CSCO).

"The proliferation of virtualized servers in the last few years has made the virtualization of the supporting network connections essential," John Fowler, Oracle's executive vice president of systems, said in Monday's announcement.

Virtualized networks are considered possibly essential for virtualized servers and likely a better solution for cloud computing, which is quickly becoming the most popular form of enterprise software.

"Customers are focused on reducing costs and improving utilization of their network," Xsigo CEO Lloyd Carney said Monday. "Virtualization of these resources allows customers to scale compute and storage for their public and private clouds while matching network capacity as demand dictates."

Oracle has been intently focused on adding cloud software options to its repertoire in the past year, spending billions to acquire RightNow Technologies, Taleo and a host of other cloud companies. With Monday's purchase, which is expected to close this fall, Oracle moves more forcefully into infrastructure solutions for those networks.

Xsigo was founded in San Jose in 2004, and has received venture-capital funding from Kleiner Perkins, Khosla Ventures, Greylock Partners and North Bridge Venture Partners. The private company counts eBay (EBAY), McAfee and Avaya among its more than 300 enterprise customers; its employees will join Oracle when the acquisition is complete, the companies announced. Oracle stock fell slightly Monday morning -- it was trading for $30.74, 0.1 percent lower than Friday close, at 7:45 a.m. Pacific time. VMware fell harder, trading down 2.2 percent at the same time, with a price of $93.61.

Source: (c)2012 the San Jose Mercury News (San Jose, Calif.) Distributed by MCT Information Services

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