Arik Hesseldahl

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Oracle Acquires Virtual Networking Concern Xsigo Systems

If you needed any further validation that virtualized networks are totally going to be the next big thing, look no further than Oracle’s acquisition of Xsigo Systems, announced this morning. Xsigo is a small company, so the financial terms aren’t being disclosed.

You can’t help but look to VMware’s $1.3 billion buyout of Nicira last week to realize that any company with any piece of the network visualization puzzle is probably going to get bought in the coming weeks and months.

Nicira had been a pretty secretive start-up, with a reputation for hiring wicked-smart networking engineers, until it came out of stealth in February and disclosed what it was working on. Suddenly, people looked at their networks and all the expensive gear they’d been buying from Cisco Systems and Juniper Networks, and slapped their heads.

A world where networks are simpler to operate and as flexible to manage as a cloud application in a data center is coming, and the prospect of its implication is something that makes executives at certain kinds of companies start speaking in hushed tones.

Xsigo had been backed by venture capital investments from Kleiner Perkins, Khosla Ventures, Greylock, North Bridge and Advanced Equities.

Oracle shares are trading down in premarket action by 17 cents to $30.60, or about one-half of 1 percent.

Analyst Brian Marshall of ISI just weighed in with some thoughts in a quick note to clients. He notes that Xsigo counts companies like, Accenture, Verizon, eBay and Qwest as customers, and that it already has a history of working with Oracle.

Oracle, Marshall says, basically wants Xsigo to enhance its engineered systems, the so-called Exa-systems (Exadata, Exalogic and Exalytics) that president Mark Hurd talked about in detail in an interview with AllThingsD last month.

Marshall then goes on to speculate that Oracle may need a stronger offering on the storage and networking front, and wonders out loud if it might step up and try to acquire storage concern NetApp, or networking outfits Brocade, Foundry or Arista to close those gaps and become more of a full-service enterprise IT vendor.

Here’s Oracle’s original announcement:

Oracle Buys Xsigo

Extends Oracle’s Virtualization Capabilities with Leading Software-Defined Networking Technology for Cloud Environments

Redwood Shores, CA – July 30, 2012

News Facts

· Oracle today announced that it has entered into an agreement to acquire Xsigo Systems, a leading provider of network virtualization technology.

· Xsigo’s software-defined networking technology simplifies cloud infrastructure and operations by allowing customers to dynamically and flexibly connect any server to any network and storage, resulting in increased asset utilization and application performance while reducing cost.

· The company’s products have been deployed at hundreds of enterprise customers including British Telecom, eBay, Softbank and Verizon.

· The combination of Xsigo for network virtualization and Oracle VM for server virtualization is expected to deliver a complete set of virtualization capabilities for cloud environments.

Terms of the agreement were not disclosed. More information on this announcement can be found at

Supporting Quotes

· “The proliferation of virtualized servers in the last few years has made the virtualization of the supporting network connections essential,” said John Fowler, Oracle Executive Vice President of Systems. “With Xsigo, customers can reduce the complexity and simplify management of their clouds by delivering compute, storage and network resources that can be dynamically reallocated on-demand.”

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

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