Oracle is the latest player to jump into the virtualization market, and the news helped cut the price of VMware shares.

But VMware did not hesitate to respond to the announcement Oracle made Nov. 12 at its OpenWorld conference in San Francisco regarding its plans to offer free server virtualization software.

"Oracle's introduction of yet another variant of Xen is clearly a response to the significant virtualization industry that VMware has established," said Parag Patel, vice president of alliances at VMware. "The offering does not address the capabilities required to achieve the cost savings and IT simplification that customers are realizing everyday from VMware's Virtual Infrastructure."

Resource Library:

The sniping was in reaction to Oracle VM, which will be available for free download on Nov. 14 and which Oracle officials contend offers scalable, low-cost server virtualization up to three times more efficient than rival offerings. The product, which is based on the open-source Xen hypervisor technology, features both Windows and Linux support and includes an integrated Web browser- based management console.

Oracle is extending its Application Integration Architecture to third-party applications. Read more here.

To speed installation and deployment, Oracle VM utilizes preconfigured Virtual Machine images of Oracle Database and Oracle Enterprise Linux. In addition, it is certified to work on Oracle Database, Oracle Fusion Middleware and Oracle Applications.

"Customers can now optimize resource consolidation by deploying Oracle VM with Oracle Unbreakable Linux and run the full Oracle software stack—Oracle Database, Oracle Fusion Middleware, Oracle Enterprise Manager and Oracle Applications—all with one worldwide support call," said Edward Screven, Oracle's chief corporate architect, in a statement.

"With Oracle VM, customers can respond more rapidly to business changes, increase ROI and reduce lifetime total cost of ownership. Oracle VM brings enterprise-class support and backing to server virtualization, giving customers the confidence to deploy virtualized solutions," he said.

Although Oracle VM is free to download, 24/7 support comes with a per-system price tag. Servers with up to two CPUs are $499 per year per system, and servers with unlimited CPUs are priced at $999 per year per system.

The release of Oracle VM puts the company in a competitive but growing market. Patel said many VMware customers use Oracle products and that the company will keep working closely with Oracle to serve mutual customers.

Charles King, an analyst with Pund-IT, said Oracle has an opportunity to make some noise in the market before Microsoft introduces its stand-alone hypervisor product next year. Calling the virtualization market potentially very lucrative for Oracle, King noted however that VMware has achieved leadership in the space for a reason and that rivals have found challenging the company to be difficult.

"If I'm VMware, I would probably say, 'Welcome to the party; let's take a close look at your solution,'" he said.

Check out eWEEK.com's for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.