The Oracle VM offering is based on version 3.1.1 of the Xen Hypervisor which according to Oracle has been fully tested so that it can be used commercially. This announcement demonstrates that Xen Hypervisor is beginning to gain significant acceptance in commercial markets as a viable alternative to VMware.
According to Oracle, they chose Hypervisor because it was cost-effective as Oracle’s customers can download Oracle VM for free and Oracle can then make money by providing support for a cost. Interesting idea and will certainly give VMware a run for their money.
More information can be found about Xen Hypervisor from Xen Source