Server virtualization is on the rise. Virtual Machines (VM) does hold their ground when compared to high performing hardware. Just add some more main memory and some disk space to your existing machine and you are able to run a new instance of another operating system. How about running vmware on a big massive hardware like Sun Niagara T2 or a rack of Intel Quad-core CPUs?
How about an organization that wants to scale up the operations and needs bigger hardware to support it? It would definitely go for a combination of both, buying fewer racks of hardware than needed and may be running VMs on it. Suppose it buys few big big n-core CPUs with support for virtualization. Still fulfilling all your needs from one physical machine gives rise to single point of failure. May be spreading your VMs logically over a farm of servers would help. It eliminates single point of failure, still availing all benefits of a VM. The biggest benefits I see are power savings, back up, security and seamless upgrades. VM running from one machine would not consume power beyond a limit. The host images could be backed up regularly. By nature, VMs are secure and would not spread the defect to the host if contaminated by worms/virus. And the most important of it, upgrades!!!!!
Upgrades seem to be essential part of IT operations of an organization. To keep up with the pace of ongoing progress of hardware, an organization would buy new hardware every few years. For hardware whose support has been discontinued, it is really hard to find a replacement. And data needs to be migrated manually which is a cumbersome process. Here a VM wins hands on with a hardware machine. Moreover, I think if multiple VMs are running same image of operating system, it is quite possible to share disk space from a nas exported file system. Essentially, force all VMs running the same operating system to mount a nas exported file system and share the same image with all other VMs. I suppose, a file system with a good distributed lock manager and support for snapshots would be able to support such circumstances. Just imagine how much space we would be saving!! Moreover, this is somewhat like deduplication (in essence, not by implementation), where the common data is shared while individual changed data is there and kept track with the help of file system snapshoting mechanism. What we have here is essentially a lethal combination!!! :)
There is in-built NFS support from vmware but I don't know what other features do they provide along with. I guess, both Vmware and Xen supports most of these facilities. Vmware owned by EMC recently released 10% of its shares and it almost doubled within few hours. Xen was also acquired by Citrix. I am wondering about the upcoming trends in virtualization!!!
Update : Intel recently announced their own virtualization initiative based on Xen. And Vmware stock dropped on the news while Oracle's rose!!!