In a surprise purchase, or at least at a surprise cost, Oracle announced the $500 million acquisition of virtualization company Ravello Systems. At $500 million, is there something to this purchase that competitors such as HPE or Dell are missing in Ravello?

I believe the answer is yes, and I’m surprised that EMC hadn’t acquired the VMware competitor in the past. The fact that Oracle shelled out half a billion for Ravello means that VMware and Dell could have missed out big time.

More than a cloud provider

Ravello Systems sells its service via a cloud-based subscription plan. In a nutshell, the service allows VMware customers to run virtual machines on AWS and the Google Compute Engine. Tools already exist to convert VMware images to AWS and Google Compute compatible formats, but the existing tools are meant to help organizations migrate to the cloud services. Ravello’s solution allows VMware workloads to run natively on other cloud platforms, however, that’s not the true value of the system.

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The real value of Ravello Systems is their hypervisor technology. The same group that created the KVM hypervisor, now the standard open source hypervisor powering solutions from companies such as Nutanix, founded Ravello Systems. Ravello’s hypervisor is called HVX, and its primary value is hypervisor abstraction. HVX allows VMs from other platforms such as KVM and vSphere to run within other hypervisors. Remember AWS and Google Compute Engine both use open source hypervisors. The technique is called nested virtualization.

To this point, Ravello is careful to note that the solution is focused on test and development workloads. As part of VMware’s vExpert program, Ravello provided me 1000 free vCPU hours a month of service. I’ve used the service occasionally and found the performance acceptable for test and development workloads. Although, its technology needs improvement to be ready for production-level workloads.

Potential within Oracle

I’m not sure of Oracle’s plan for Ravello Systems intellectual property. However, the current cloud service is only one use case for the HVX hypervisor. I’ve long wondered why a company such as Nutanix hasn’t licensed the technology from Ravello to fast track their desire to compete with VMware vSphere. It seems relatively straightforward to take the HVX hypervisor and run it within a hyper-converged platform. In theory, customers could seamlessly move workloads between VMware vSphere and HVX, eliminating vSphere licensing costs for test and development.

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I see the potential for Oracle to take the concept even further. Oracle could continue down the route of offering a test and development environment for vSphere customers on AWS and Google Compute Engine, but I don’t believe Oracle would pay $500 million for such a limited use case. If I were a guessing man, and I am, I’d guess Oracle plans an assault on VMware licensing.

What do you think?

How do you see Oracle leveraging Ravello Systems’ capabilities? Will Oracle mount competition for the enterprise hypervisor, or will this be another cloud service that doesn’t take off? Tell us your opinion in the comments.