Oracle has fashioned itself as somewhat of an acquisition whiz making deals for great technology products (PeopleSoft, J.D. Edwards, Hyperion) and then squeezing more value of out of them. That’s certainly what it looks like the company is doing once again with its blockbuster acquisition of Sun.

Why in good heaven then did the company decide to abruptly terminate channel sales relationships with the acquisition of  red-hot virtualization server management software maker Virtual Iron Software Inc.?

As we have reported on ChannelWeb this week, solution providers have received termination letters from Oracle and a couple of key sales and channel executives have left Virtual Iron. It looks like Oracle is canceling all reseller agreements and then planning to invite select Virtual Iron resellers to apply for Oracle partner status. Then why not come out and clearly lay out a road map for partners on what they need to do make the grade with Oracle?

As is often the case in the convoluted world that is the channel communicating with partners and clearly laying out what is expected from partners in the wake of an acquisition is an afterthought. A letter from Oracle CEO Larry Ellison to partners thanking them for their hard work and welcoming them to the Oracle fold would seem to me more in order given the great products Virtual Iron is bringing to Oracle. Would Oracle treat its own salespeople this way? Well maybe given the rough and tumble Oracle sales culture.

In any case, how in the world does it make sense to cut off a significant potential channel revenue source, taking a sales army that was locked and loaded selling server virtualization and then giving them what amounts to their walking papers? It reminds me of an old move studio exec who when questioned about continuing the popular Rocky film series by an art addled critic replied: “I see no reason to cut off that revenue stream.” Why cut off the Virtual Iron channel revenue stream?

To add insult to injury, Oracle had the audacity to post a partner letter on Virtual Iron web site from Oracle Channel Chief and Group Vice President Worldwide Alliances and Channel Judson Althoff boasting that the deal will benefit Oracle partners. “Resellers and distributors are expected to gain expanded opportunities to provide solutions,” wrote Althoff. “We anticipate that technology partners will gain broader opportunities for development integrations and system integrators will have the opportunity to extend services around Oracle's solutions. Partners can take advantage of Oracle’s worldwide resources and enablement through the Oracle PartnerNetwork program.”

The first rule of an acquisition is: do no harm. In this case, Oracle has done irrepairable harm. It not only has cut off a potential  channel revenue stream, it has lost key channel talent. No small matter in a world where channel IQ is in short supply.

There is one happy ending to this sad channel tale. Virtual Iron’s two top channel executives have left Virtual Iron for Akorri, a Littleton, Mass.-based developer of software for optimizing performance and utilization in dynamic data centers.

Bill Simpson, the former vice president of global channel sales and strategy at Virtual Iron, has taken the role of vice president of worldwide sales at Akorri. And Warren Mead, the former Virtual Iron national sales director, has become vice president of U.S. channels at Akorri. That’s good new for Akorri and its channel partners. Sounds to me like a great opportunity for VARs looking for an innovative solution in a channel friendly package.