The move is being compared by industry observers to VMware's $1.2 billion purchase earlier this month of Nicira, whose Network Virtualization Platform enables the definition of logical virtual networks based on specific workloads. A few weeks before the Nicira acquisition, VMware bought DynamicOps, which provides multi-hypervisor management .

Virtualization of Network Connections

The acquired companies apply virtualization to the creation of multiple virtual networks, moving forward the software-defined data center so that virtual machines, configured under different brands of software, can be reassigned as needed. For Oracle, Xsigo adds network virtualization to its server virtualization offerings, thus moving the company into a more competitive position against networking competitors VMware, Cisco , and others.

Xsigo's software streamlines cloud infrastructure and operations by enabling customers to dynamically connect any server to any network or storage . The result, the companies said, is a more efficient use of networked assets and an increase in application performance, coupled with a reduction in cost.

John Fowler, Oracle executive vice president of Systems, said in a statement that "the proliferation of virtualized servers in the last few years has made the virtualization of the supporting network connections essential." He added that, with Xsigo, "customers can reduce the complexity and simplify management of their clouds" by delivering resources that can be dynamically reallocated when required.

In the acquisition announcement, Xsigo CEO Lloyd Carney said that, as customers are focused on reducing costs while improving their network utilization, virtualization "allows customers to scale compute and storage for their public and private clouds while matching network capacity" to changing demands.

Xsigo's technology is currently being used by hundreds of enterprise customers, including British Telecom, eBay, Softbank and Verizon. The Xsigo acquisition is expected to close later this year and, until it does, both companies will continue to operate independently.

The Buy Out Binge Continues

Oracle's move is seen in some quarters as part of its strategy to reinvent itself, as cloud- and virtualized-based computing grows and morphs.

While this purchase strengthens its infrastructure offerings, Oracle has also has been busily acquiring companies with major cloud components. Such acquisitions have included social media manager Involver, human resources software company Taleo, customer -service solutions provider RightNow Technologies, social-media analytics firm Collective Intellect, social marketing firm Virtue, and data management company Endeca.

Other companies previously acquired by Oracle include Siebel Systems, JD Edwards, Hyperion, and PeopleSoft.

Last month, Oracle launched its first broad, subscription-based cloud service. The new Oracle Cloud includes platform-as-a-service access to the company's key products, including Fusion CRM , the Oracle Social Network, Fusion human capital management, the Oracle Database Service, and the Oracle Java Cloud Service.

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