Oracle adds network virtualization with Xsigo

Contact: Brenon Daly, John Abbott

A week after VMware made its network virtualization play with the blockbuster purchase of Nicira Networks, Oracle has expanded its own virtualization portfolio by reaching for I/O virtualization startup Xsigo Systems. Although both startups loosely fall into the category of ‘software defined networks’ (SDNs), Xsigo itself used that description only sparingly to talk about its business. And if we look deeper at the two deals by the serial acquirers, we see they’re actually quite different.

For starters, the targets were at very different stages of commercial deployment. Nicira only had a handful of customers, and we understand that it still measured its revenue in the single digits of millions of dollars. In contrast, Xsigo indicated that it had tallied roughly 550 deployments since it began shipping its product some five years ago. It was generating revenue in the tens of millions of dollars, according to our understanding.

Further, the strategic drivers for each of the networking acquisitions are quite different. For VMware, the purchase of Nicira represents its grand plan to do to switches through virtualization what it has already done to servers through virtualization. For Oracle, there’s arguably a more focused goal for Xsigo, at least in the near term. My colleague John Abbott speculates that Xsigo’s technology is likely to be deployed as a means of providing a broader virtualized network fabric to surround Oracle’s Exa family of systems, boosting the number of available network and storage connections and making them more suitable for hosting cloud services. Look for our full report on Oracle’s acquisition of Xsigo in tonight’s Daily 451.