Oracle buys Virtual Iron, expands portfolio

By Jim Finkle

BOSTON (Reuters) - Oracle Corp (ORCL.O: Quote, Profile, Research) plans to acquire privately held virtualization software maker Virtual Iron, a move analysts said will put pressure on VMware Inc (VMW.N: Quote, Profile, Research), 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: Quote, Profile, Research) and Microsoft Corp (MSFT.O: Quote, Profile, Research), 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.