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From a technical standpoint, it's certainly possible to run database server products (such as Microsoft SQL Server) within a VM (virtual machine). The first question I would ask, however, is whether you can consolidate your database servers without using virtualization.
Since a single SQL Server installation can support dozens of different databases, it might be more efficient to copy the databases rather than create new VMs. If you have good reasons to create VMs, the primary issues you're likely to run into are related to performance of CPU, memory and disk subsystems. Active database servers tend to tax these resources, and the overhead of virtualization can be noticeable in many cases.
It's a good idea to perform some load testing on those systems before moving forward. There are numerous physical-to-virtual (P2V) conversion tools available from Microsoft, VMware, PlateSpin and other vendors.
Regarding the virtualization platform (VMware vs. Microsoft), both should work fine. As it's difficult to recommend a product without complete technical details and testing, I suggest you evaluate your workload and management requirements by running SQL Server in each of them.
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