Well, it looks like the whole HP part of that equation may be on hold. As you know by now, HP fired former CEO Mark Hurd, who was promptly hired by his good buddy Larry Ellison to be a president at Oracle, and now HP is suing Hurd for joining its rival/partner.

In response, Ellison has gone all “oh no they didn’t!” and released a tersely worded statement calling the lawsuit “vindictive.”

“The HP board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace,” the statement says. So I guess that means you shouldn’t look for Oracle VM on HP servers any time soon.

Vendor lock-in is also a big concern when you’re talking about Oracle, especially now that it owns Sun and has plans to build its own Oracle VM machine.

But it turns out that even Oracle recognizes the importance of customer choice when it comes to virtualization. In a somewhat surprising bit of news today, hardware rivals Dell and Hewlett-Packard have certified Oracle VM, Oracle Enterprise Linux and Solaris and will sell those systems on their x86 servers.

With this news, the server virtualization market is getting about as complicated as the plot of “Inception.” Are Dell and HP REALLY reselling Oracle VM, or is it all in my mind?

Try to follow along: Oracle, HP and Cisco are all pushing converged infrastructure and virtualization-ready appliances. Oracle is the only one that has its own hypervisor and its own hardware, but the company still partners with HP and Dell, two of its major hardware competitors. HP has virtualization partnerships in place with both VMware and Microsoft, who don’t exactly get along. And Cisco’s focus is on its Unified Computing System and Virtual Computing Environment coalition with VMware and EMC. (And that’s not to mention the Microsoft-Citrix relationship, or the various partnerships that Red Hat and Novell have.)

Such tangled webs have always existed in IT, but they’re getting more tangled than ever before, and today’s news is one of the best examples yet.

Market dynamics aside, these Dell and HP deals are good for Oracle. Oracle VM has a tiny market share, so anything that makes it easier for customers to buy and deploy will help …

… unless this is all just a dream. Where’s my totem?

Now, Oracle is banking on an appliance to do the same for its lagging virtualization market share.

Our sister site SearchITChannel.com reports that a so-called “Oracle VM machine” (perhaps developed by Oracle’s Department of Redundancy Department?) is in the works. Oracle President Charles Phillips disclosed the news during the company’s quarterly earnings call last week.

The Oracle VM machine will bundle the Oracle VM hypervisor with Oracle VM Manager software on a server with integrated network switches and storage arrays. Phillips didn’t offer many details (or a timeline), but it’s basically the same approach that Cisco has taken with UCS and rival Hewlett-Packard is now taking with its converged infrastructure push.

At best, converged infrastructure is only a good option for certain organizations — usually those that are totally new to virtualization or don’t have large virtual infrastructures already in place. In this respect, Oracle is making a smart move: In theory, it will be easier to gain virtualization market share by going after greenfield opportunities than by trying to convert VMware shops.

But a lot of potential customers are wary of these kinds of appliances because they fear vendor lock-in. Sure, Cisco relies on VMware virtualization and EMC storage for the UCS, and HP has agreements in place with both VMware and Microsoft, but you still limit your options by going this route.

And the Oracle VM machine will presumably be even worse, because Oracle doesn’t need to rely on any other vendor’s equipment. The company already has the virtualization and management software, and all the hardware is there too, thanks to the Sun acquisition.

Between Oracle’s very late push into the virtualization market and the overall lukewarm reception to these kinds of appliances, the Oracle VM machine better offer one heck of a kick-start if it’s going to change the company’s fortunes.

The Sun acquisition brought lots of hype about the future of Oracle-Sun virtualization. Now, after months of talk, we’re starting to see some actual work.

Oracle is certifying Sun’s Solaris 10 as a guest OS in Oracle VM 2.2.

The Oracle virtualization strategy focuses on integration across the company’s vast hardware and software stack. No other vendor can provide so much, from the servers to the applications to the hypervisor to the operating system. But the key is, they all have to work together and talk to each other.

Oracle VM support for Solaris, the popular UNIX OS for Sun’s SPARC systems, is a solid first step in that direction.

During yesterday’s five-hour Oracle-Sun press conference, Oracle’s chief corporate architect Edward Screven took aim at VMware: “VMware is integrated with nothing. It’s a point solution.”

Of course, that’s not entirely true. VMware integrates with lots of stuff, both hardware and software, but it’s usually other vendors making that other stuff. (The Cisco Unified Computing System is a prime example.) Judging by VMware’s longstanding dominance in the market, this is a strategy that has worked out pretty well for them.

Now that it has Sun’s virtualization and hardware assets, Oracle is taking a different approach: stressing the value of integrated management (with Oracle Enterprise Manager) and virtualization-specific hardware/software bundles, all from one vendor.

Alone, Oracle and Sun never had much success in virtualization. (When Screven touted Oracle VM as “the best virtualization solution for databases” yesterday, my colleague Bridget Botelho responded on Twitter: “Then why doesn’t anyone use it?”)

And they didn’t announce anything revolutionary yesterday that would immediately cause people to jump on the Oracle-Sun virtualization bandwagon. (Sounds like underwhelming press conferences was the theme of the day, eh, Steve Jobs?)

Clearly, Oracle needs to do more to become a major player. The whole trend of integrated hardware and software for virtualization is something the vendors are pushing; it’s not something a whole lot of customers want now.

Larry Ellison and his Oracle execs know they can’t take on VMware just by talking a good game. So they must have bigger plans in the works. Will they build Oracle VM up using the Virtual Iron technology they acquired last year? Or will they make an even bigger splash by acquiring Citrix?

VMware once enjoyed free reign of the market. Then along came Microsoft, the biggest software company in the world, which became a serious challenger in just a few short years. Now the third-biggest software company, Oracle, is making a similar move. Whatever happens, things are about to get very interesting.

Xen 4.0 will feature fault tolerance and the Open Virtual Switch, among other new features. Open source virtualization expert Sander van Vugt said the Open Virtual Switch “will take networking in Xen to the next level.”

“I’m convinced that this release is going to be huge,” he wrote in an email.

The new release comes at a crucial point for Xen. Citrix, the company most closely associated with Xen, faces constant questions about its commitment to XenServer and the server virtualization market as a whole.

Meanwhile, as virtualization.info’s Alessandro Perilli points out, Oracle is looking to become a bigger player in virtualization. Its Oracle VM is also Xen-based, so Xen 4.0 could help its charge into the market. (But then again, so could the rumored Oracle-Citrix acquisition.)

Xen also has an emerging open source challenger on its in hands in KVM, which is built into the Linux kernel. Although van Vugt took the side of KVM in our recent Xen vs. KVM debate, he still predicts good things for the future of Xen.

“Currently, VMware clearly is the more complete virtualization solution,” he wrote in his email. “Releasing the Xen 4 hypervisor will put Xen completely back in the picture, not only for Citrix, but for all other players in the Xen area as well.”

Oracle is sizing up Citrix for a possible acquisition, according to Briefing.com (via The Register). The move would give Oracle its biggest stake yet in the virtualization market — not only in server virtualization, where Oracle VM hasn’t exactly lit the world on fire, but in desktop virtualization, where Citrix is the leader.

Still, an Oracle-Citrix acquisition wouldn’t guarantee virtualization success. A lot depends on what Oracle would do with Citrix’s technology and products. If Oracle were to take the same approach it took with Virtual Iron — discontinuing its products and canceling its reseller agreements — Citrix customers would be up in arms.

Plus, the whole open source issue would come into play with an Oracle-Citrix acquisition. Even though Oracle VM is based on Xen, Oracle is first and foremost a proprietary software company. There would inevitably be friction with the open source community.

As an aside, it would also be fascinating to see the interactions between two of the industry’s most outspoken and controversial executives (Oracle CEO Larry Ellison and Citrix CTO Simon Crosby). Here’s some reaction from around the Web to the Oracle-Citrix acquisition rumors:

Tarry Singh, Sustainable Global Clouds: “VMware and other players will be stunned … Oracle has already declared war on many fronts and by doing a Citrix acquisition it will definitely make a massive statement to the virtualization market.”

Jesse Freund, Cisco analyst relations manager: “Oracle buying Citrix: Um, why? They already have duplicates and triplicates of those assets. Other than to annoy Microsoft, of course.”

Gabriel Pagan, virtualization consultant: “Oracle buying Citrix? Makes no sense, Citrix is too much up Microsoft’s [rear] for Oracle”

VMware is reaching out to Virtual Iron users, following Oracle’s decision to kill off the Virtual Iron product line last week. (Oracle acquired Virtual Iron in May.) As my colleague Alex Barrett reports today, VMware is offering Virtual Iron customers 40% off the list price of vSphere and vCenter.

The offer is an apparent attempt to keep Virtual Iron’s customers from moving to Oracle VM (which is what Oracle wants them to do). But that raises the question: Why does VMware care?

There are only about 2,000 Virtual Iron customers out there, and Virtual Iron had less than a 2% share of the market. On top of that, Oracle’s market share is even smaller, by most estimates.

Even if VMware were to successfully woo all 2,000 Virtual Iron customers, their effect on VMware’s market share and profits (especially with this discount) would be minimal. And on the flip side, even if they were all to move to Oracle, Oracle would still be nothing more than a bit player in the market.

VMware clearly sees Larry Ellison’s deep pockets as a threat. It’s good to recognize that, but letting it become a distraction — like this Virtual Iron discount program — could lead to problems down the line.

And since I got the song in your head, here’s Tom Petty and the Heartbreakers with “Refugee”:

[kml_flashembed movie="http://www.youtube.com/v/gJ-bhM-xuec" width="425" height="350" wmode="transparent" /]

Most of the early reaction to the news has focused on the fallout in the database market. Oracle, the market leader, now owns the biggest thorn in its side, Sun’s open source MySQL.

But the real legacy of the Oracle-Sun acquisition could be its effect on the virtualization market — particularly on VMware.

“Oracle now has the ability to compete head-to-head with VMware, Citrix, Red Hat, and Microsoft for virtualizaton supremacy,” writes blogger Floyd Strimling. “They now own Sun’s xVM products and solutions that are cutting-edge.”

Oracle’s past attempts at getting into virtualization — namely its Oracle VM hypervisor — have failed to make much of a splash. But you could tell over the past month or so that Larry Ellison had something up his silk-shirted, gold-cufflinked sleeve.

First there was word that Oracle had its eyes on acquiring VIrtual Iron. (Wonder where that stands now?) Then Oracle launched its own virtualization blog, which regularly takes shots at VMware. Now it’s all coming into place.

“Oracle now has physical hardware [and] a real OS for their virtual story,” analyst Greg Schulz writes on Twitter. “Ironic, virtual servers still need physical servers.”

This acquisition is the latest example of consolidation, as more vendors look to become one-stop shops for their business customers, according to Illuminata analyst Gordon Haff. He writes on CNET that “the system vendor landscape is being reconstituted into big, highly integrated companies that can do it all.”

When you look at that trend from a virtualization standpoint, VMware and Cisco stick out with the Virtual Data Center Operating System and Unified Computing System, respectively. VMware knows the virtualization software business better than anyone else, but it typically relies on OEMs to meet customers’ hardware needs. Cisco has the infrastructure down pat, but its virtualization expertise just doesn’t match up as of yet.

Clearly there is room for a vendor that has both a hardware play and a software play. With this Sun acquisition, could Oracle now be that vendor?

“With this acquisition Oracle gets the entire Sun virtualization portfolio, and its entire computing stack (servers, storage, hypervisor, operating system, management layer, connection broker, etc.),” writes Alessandro Perilli. “If Oracle plays well its cards here in a couple of years it may become a dangerous competitor for VMware.”

But, the newly released Oracle Enterprise Manager 10g Release 5 (10gR5) includes a VM Management Pack for Oracle VM that gives people using Oracle VM competitive features like high availability, lifecycle automation and application relationship management, making it a more attractive virtualization option.

Oracle’s Xen-based hypervisor runs on x86-64 Intel- and AMD- based systems and can support any operating system that runs on those platforms. Oracle officially certifies Linux and Microsoft Windows to run as a guest OS. The Oracle VM management tool (Oracle VM Manager) comes in the form of a Web-based interface that manages virtual server pools and performs tasks like live migrations.

The Oracle VM Management Pack 10gR5 gives users a way to manage their physical and virtual environments from one console. Some features include diagnostics of whether a problem is due to an application component, a virtual machine or physical resource issue and built-in configuration management that gives IT a way to track application relationships and analyze configuration changes.

The new management pack also lets you assign specific policies for virtualization, automated deployment through Oracle VM Templates for packaged applications, middleware, database, and Oracle Enterprise Linux. There are also lifecycle automation features for testing, deployment, patching and maintenance capabilities, including automated patching of operating systems and Oracle software running inside the guest VMs.

Lastly, Oracle VM users can now get high availability with new features that allow for server pooling, automatic load balancing and server failover. Many analysts say high availability is an absolute necessity when it comes to virtualization, so it’s great that Oracle decided to add that feature.

Perhaps I should start considering Oracle VM a contender in the virtualization market, especially against Microsoft Hyper-V, which doesn’t even have live migration yet. Or maybe not. Either way, it is an option.

If you run a ton of Oracle apps and you want to give Oracle VM a shot, it is free to download form their website. Oracle VM support per two-socket server costs $599, and includes access to software and updates through the Unbreakable Linux Network and 24X7 support. Oracle VM Premier Support costs $1,797 per two sockets for three years, and includes network access plus 24×7 support.