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Oracle Adds Virtual Iron to Its Fire

Database giant Oracle's M&A spree continues as Ellison sets his sights on the data center.

Editor's note: This article was originally published May 13

Barely a month after sending shockwaves through the tech sector with its surprise

acquisition

of

Sun Microsystems

(JAVA)

,

Oracle

(ORCL) - Get Oracle Corporation Report

has again opened its checkbook, this time

snapping up

virtualization specialist

Virtual Iron

.

The acquisition of the privately held firm, which competes with virtualization giant

VMware

(VMW) - Get VMware, Inc. Class A Report

, marks yet another big change in Oracle's strategy. Oracle CEO Larry Ellison clearly is looking to challenge

IBM

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and

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Hewlett-Packard

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in the data center market, and Virtual Iron could become a key weapon in that endeavor.

With the $7.4 billion Sun deal, Oracle took its first steps on the path to becoming a hardware supplier. In buying Virtual Iron, which sells server virtualization software, Oracle 's adds another layer to its long-term strategy.

Virtualization, which lets users divide physical hardware into multiple "virtual" chunks, has become more popular among users looking to juggle several operating systems and applications. The technology also is one way budget-minded firms can reduce the amount of hardware within their data centers.

"Industry trends are driving demand for virtualization as a way to reduce operating expenses and support green IT strategies," said Wim Coekaerts, Oracle's vice president of virtualization engineering, in a statement.

Oracle already offers its eponymous Oracle VM virtualization software but will now use Virtual Iron to bolster its management capabilities. By offering users a way to automate their servers, Oracle claims that Virtual Iron will reduce datacenter power consumption, something which has become the bane of IT managers' lives.

There are already some major similarities between the two firms' virtualization technologies, which both use Xen open source hypervisors.

Neither firm has revealed the value of the acquisition, which is expected to close sometime in the summer.

Despite Oracle's acquisition tear, there have recently been signs that virtualization is also feeling the effects of the financial meltdown.

VMware, which recently launched the latest version of its software,

missed

Wall Street's first-quarter revenue estimate.

Oracle's move is just the latest example of tech sector consolidation, as evidenced by

Cisco's

(CSCO) - Get Cisco Systems, Inc. Report

server launch

and the subsequent

tremors

.

Shares of Oracle slipped 31 cents, or 1.7%, to $18.07 Wednesday, as the Nasdaq fell 3.01%.