August 1, 2012, 10:57 AM

Oracle buys Xsigo Systems for big-data cloud technology

With clients like eBay, Xsigo brings data management to challenge IBM and HP.

Paul Demery

Managing Editor, B2B E-commerce

Lead Photo

Oracle Corp. has agreed to buy Xsigo Systems, whose technology can help retailers better manage busy periods online. Oracle didn’t say what it expects to pay for Xsigo.

Xsigo specializes in providing “network virtualization” technology, which enables clients to access additional computing and data storage available in Internet server farms, often referred to as cloud technology. Xsigo software enables users to expand the capabilities of a single server by connecting with computing and data storage capacity from multiple cloud-based servers simultaneously as needed, providing what data experts say can be an extremely efficient way to increase computing power and data storage.

“This helps Oracle serve large data-intensive markets better,” says Richard Fichera, a technology analyst at Forrester Research Inc.

For retailers, the ability to dynamically connect with additional computing and data storage can be particularly helpful during peak shopping periods, Fichera and other experts say. It can also help retailers’ technology and service providers, such as Xsigo client ExactTarget, an e-mail services provider, quickly ramp up during busy periods.

While Oracle already has network virtualization software it calls Oracle VM for connecting with cloud-based servers, it hasn’t had a strong component for connecting with cloud-based storage and, as a result, has ceded that end of the market to IBM Corp. and Hewlett-Packard Co., Fichera says. “Xsigo brings a capability that Oracle lacks and that HP and IBM have,” he says. “It brings value for Oracle in being able to offer a complete network infrastructure.”

The deal should also help shore up Xsigo’s business by connecting it with Oracle’s customer base. Xsigo has struggled for market share against IBM, HP and Cisco Systems Inc., Fichera says.

Xsigo’s customers include eBay.com, tickets site StubHub.com, Verizon Communications Inc. and CarFax, the online seller of motor vehicle records. Oracle says it expects to close on the deal this fall. Xsigo is the latest in a series of Oracle’s acquisition targets, including social marketing company Involver and Collective Intellect, whose technology is designed to let marketers interact with consumers on social networks.

The Oracle-Xsigo deal follows an agreement announced last week by VMWare Inc., another provider of network virtualization technology, to pay about $1.05 million in cash, plus the assumption of about $250 million in liabilities, for Nicira Inc. Like VMWare, Nicira provides software for accessing cloud-based computing power and data stores, but it also brings VMWare additional expertise such as for operating in open-source technology systems, the two companies say.

Nicira’s clients include eBay and RackSpace Hosting, a provider of Internet hosting services to online retailers. VMWare’s clients include Revlon Inc., Southwest Airlines and retailer Active Sports, whose flagship e-commerce site is The-House.com.

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