Oracle, Red Hat Acquisitions

Red Hat Inc. announced it is acquiring Qumranet Inc., a provider of virtualization software. In other news, Oracle Corp. released word that it is purchasing ClearApp Inc. while Wall Street analysts revealed they expect Oracle to report a tepid first quarter.

Focal Points:

• Red Hat made a major move into the PC desktop virtualization market with its $107 million acquisition of Qumranet, a Sunnyvale, CA-based software company. The acquisition of the privately held firm is expected to close this year. The company's teams of professionals that develop, test and support Qumranet solutions, and its leaders of the open source community KVM project, are expected to join Red Hat. Qumranet's kernel-based virtual machine (KVM) platform and SolidICE desktop virtualization infrastructure (VDI) solution are designed to assist enterprises seeking to reduce the total cost of ownership of client systems by virtualizing them onto server platforms. SolidICE was unveiled in April 2008 and is a high performance, scalable virtualization solution designed specifically for desktops. It is based on the Simple Protocol for Independent Computing Environments (SPICE) and enables a Linux or Microsoft Corp. Windows desktop to run in a virtual environment hosted on a server.
• Oracle announced it has entered into an agreement to purchase ClearApp, a provider of application management solutions for composite applications. Terms of the deal were not made public. The deal is expected to close by year end. ClearApp's QuickVision addresses the service-oriented architecture (SOA) visibility gap by discovering and modeling the functional dependencies inherent in those environments. QuickVision enables customers to locate and examine end-to-end business services and component dependencies in runtime, monitor business service performance, and diagnose performance issues. According to Oracle, the combination of ClearApp products and Oracle Enterprise Manager is expected to provide customers with a comprehensive application management solution that delivers enhanced service levels, reduced system down-time and improved return on SOA investments.
• After checking with industry contacts Wall Street analysts stated they believe Oracle's first quarter will be tepid. The analysts stated Oracle offered a significant number of fairly deep discounts in its fiscal first quarter, which ended in August. A Piper Jaffray analyst said other factors behind the "lukewarm" orders were a sales reorganization that may have been disruptive and price increases that may have pushed some business into the second quarter. Conversely, the analysts saw some pockets of strength in database, middleware and business intelligence sales. Oracle reports first-quarter earnings on Sept. 18.

Experton Group believes VDI will garner a significant share of the PC desktop market as companies seek to contain costs and reduce compliance and security risks. However, enterprises will require strong end-to-end SOA and virtualization management tools to ensure they do not create performance issues that impact business productivity and revenue streams. Oracle's acquisition is timely and should help Oracle convince its clients that it is focused on the strategic SOA issues. IT executives should understand the full impacts of SOA and VDI before deploying these new technologies across the enterprise. IT executives must develop a plan to ensure the application dependency and network bandwidth implications do not create business service management nightmares.