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Virtual Iron resellers have just days left to sell products under extremely restrictive terms before Oracle, the company’s new owner, shut down the virtualization software company.

According to a report by The Register, Oracle is prohibiting partners from selling Virtual Iron products to new customers and is restricting sales outside of existing customers after June 30. Oracle is developing a new virtualization product that it tells partners will be available to existing Virtual Iron customers at a future undisclosed date.

In a letter to partners obtained by The Register, Oracle tells partners, “Until June 30, 2009, Oracle may approve granting add-on licenses to existing Virtual Iron end customers, or licensing end customers who had demo’d or otherwise evaluated the former Virtual Iron products and do not require further delivery.”

Attempts by Channel Insider to reach Oracle for comment were unsuccessful. Neither Oracle or Virtual Iron’s Web sites had any mention of discontinuing sales.

Oracle tells partners it will continue to support Virtual Iron Extended Enterprise Edition version 4.4 through Sept. 3 and version 4.5 through Jan. 14, 2010.

The exact impact of Oracle’s reported decision to shut down Virtual Iron is unclear. Oracle bought Virtual Iron in May for an undisclosed amount. Virtual Iron reportedly has more than 1,500 partners reselling its virtualization software to small and midsized businesses. However, according to a report in The New York Times, Virtual Iron had $3.4 million in revenue but spent $17.7 million on sales, operations, marketing, and research and development.

From the day the acquisition was announced, industry analysts and observers speculated that the deal was more about Oracle gaining access to Virtual Iron’s technology and keeping it away from other virtualization vendors, such as VMware and Citrix.

The Register article speculates that Oracle may use the Virtual Iron code to complete or enhance virtualization hypervisor being developed by Sun Microsystems, which Sun acquired in April.