What is a virtual machine?

A virtual machine (VM) is a virtual environment that works like a computer within a computer. It runs on an isolated partition of its host computer with its own resources of CPU power, memory, an operating system (e.g. Windows, Linux, macOS), and other resources. This allows end-users to run applications on VMs and use them as they normally would on their workstation.

How do virtual machines work?

VMs are made possible through virtualization technology. Virtualization uses software to simulate virtual hardware that allows multiple VMs to run on a single machine. The physical machine is known as the host while the VMs running on it are called guests.

This process is managed by software known as a hypervisor. The hypervisor is responsible for managing and provisioning resources—like memory and storage—from the host to guests. It also schedules operations in VMs so they don’t overrun each other when using resources. VMs only work if there is a hypervisor to virtualize and distribute host resources.

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Types of hypervisors

There are two types of hypervisors used in virtualization.

Type 1 hypervisors

Type 1 hypervisors (also known as bare metal hypervisors) are installed natively on the underlying physical hardware. VMs interact directly with hosts to allocate hardware resources without any extra software layers in between.

Host machines running type 1 hypervisors are used only for virtualization. They are often found in server-based environments like enterprise data centers. Some examples of type 1 hypervisors include Citrix Hypervisor (previously XenServer), VMware vSphere, and Microsoft Hyper-V.

A separate management tool is needed to handle guest activities like creating new virtual machine instances or managing permissions.

Type 2 hypervisors

Type 2 hypervisors (also called hosted hypervisors) run on the host computer’s operating system.

Hosted hypervisors pass VM requests to the host operating system, which then provisions the appropriate physical resources to each guest. Type 2 hypervisors are slower than their type 1 counterparts as every VM action has to go through the host operating system first.

Unlike bare-metal hypervisors, guest operating systems are not tied to physical hardware. Users can run VMs and use their computer systems as usual. This makes type 2 hypervisors suitable for personal users or small businesses that don’t have dedicated servers for virtualization.

Why should businesses use virtual machines?

Resource and cost efficiency

Organizations use virtualization to host multiple VMs on one server. Let’s say an organization wants to deploy several applications. Instead of investing in extra servers, they can deploy VMs on one server for each application—the same outcome at a fraction of the cost. This improves cost-efficiency since the physical hardware is utilized to its maximum capacity.


Adding a VM is as simple as cloning copies of existing VMs in the physical machine. Organizations can respond better to fluctuations in load, which helps stabilize performance. This is faster and more efficient compared to installing different operating systems on physical servers.


VM environments are isolated from the host operating system, which boosts security as vulnerabilities like malware don’t impact the underlying hardware. This makes VMs ideal for testing new applications or software changes before they enter production.

A compromised VM can be easily reverted to older versions. It can also be deleted and recreated quickly to speed up disaster recovery.

Cloud computing

Virtualization goes hand-in-hand with cloud computing. Organizations can deploy cloud-native VMs and migrate them to on-premises servers—and back—to take advantage of hybrid clouds.

Cloud services can also be tweaked in real-time to meet varying usage levels. This improves scalability not only for end users but also internally. Developers, for example, can create ad hoc virtual environments on the cloud to test their implementations.

Virtualization also enables virtual desktop infrastructures (VDI) in organizations. VDI deployments allow users to access desktop environments like Windows or open source operating systems (e.g Linux) remotely. Think of it as a digital office that is available anytime, anywhere. Distributed teams will be more productive as team members have easy access to company tools regardless of their work setups.

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Additional resources