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Server virtualization is a technique that gets more use out of a physical server by partitioning it into many small, virtual servers by using virtualization software. Each virtual server behaves like a separate physical server, and can run multiple operating systems at the same time. This greatly increases the capacity of the individual machine.

Server virtualization relieves the problem over overcrowded data centers with racks of servers that consume a lot of power, generate a lot of heat, and use only a fraction of their overall processing power to run one application. Administrators can consolidate several machines onto one server running multiple virtual environments, and dramatically lower their data center costs.

This technique also provides redundancy without requiring additional hardware. Administrators can install the same mission-critical apps on more than one virtual server, and if one fails the other one can take its place without any loss of service. To prevent data loss if the physical server fails, administrators typically create these redundant virtual servers on different machines.

There are three different ways to create a virtual server – full virtualization, para-virtualization, and OS-level virtualization. In all cases, the physical server acts as the host, and the virtual servers are the guests.
In a full virtualization model, special software called a hypervisor interacts with the host directly and acts as a platform for each of the guests. None of the guests is aware of the other guests and each is completely independent. In a para-virtualization model, the guests are aware of each other so the hypervisor does not need as much processing power to manage the guests. In an OS-level model, there is no hypervisor, so the host OS has to do all of the work. In this model, all of the guests have to use the same OS, which is why this is called a homogeneous environment. For environments where everything uses the same OS, this model is a good choice because it tends to be faster and more efficient than the other methods.

To support the growing interest in virtualization, products are available with built-in support. For example, SUSE Linux Enterprise Server ships with Xen and KVM, the two most popular open source hypervisor technologies, and is the most affordable OS to use in virtual environments. Out of the box, SUSE Linux Enterprise can create virtual machines running both modified, highly tuned, paravirtualized operating systems and fully virtualized unmodified operating systems.