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NY Times Reports, With Virtual Iron, Oracle Bought a Big Loss

VMBlog recently reported the fact that Oracle acquired Virtual Iron for an undisclosed amount.  But the NY Times has obtained financial documents that shows Oracle may have acquired Virtual Iron, but Virtual Iron wasn't really doing that well (as we all expected).  The company was evidently going through its VC funding, unable to reach enough customers and make enough money to keep them going in the hypervisor wars.

The NY Times notes:

The documents indicate that Virtual Iron had just $3.4 million in revenue last year. That’s a big rise over $1.5 million in 2007. But Virtual Iron sure spent a lot of money to get that revenue.

Its sales, marketing, research, development and administrative costs were $17.7 million last year, up from $13.6 million in 2007. So, in 2008, Virtual Iron posted a loss of $15.3 million.

...

Oracle has declined to reveal how much it paid for Virtual Iron, but with the revenue in 2008 sitting so low, it seems pretty clear that the investors lost out on this start-up — that is, unless Oracle was willing to pay many, many times Virtual Iron’s revenue. (The company did report $17 million in cash and equivalents in 2008.)

Well, now Oracle will have to figure out how to merge three different Xen technologies together to get whatever it is they are hoping to offer to the public.  They had Oracle VM, acquired Sun and Sun xVM and now Virtual Iron.  For their sake, I hope these things are easily merged.  Let's see if the Virtual Iron and Sun virtualization experts stick around to help see that through.

Published Monday, May 25, 2009 8:36 PM by David Marshall
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