I/O-related bottlenecks represent only one of many different areas that should be considered in relation to virtualization performance. If a bottleneck is defined as the slowest step in a given process, then it stands to reason that just about any physical resource on the host could limit performance. Keep in mind that virtualization will add overhead when accessing CPU, memory, disk, network and other resources.
For more information on managing these resources, see my article series Optimizing Microsoft Virtual Server 2005. In those articles, I cover ways in which you can monitor and improve performance of these important system components. For example, there are ways in which you can dedicate CPU resources to a specific virtual machine. And, you can use network-based storage to get around local storage limitations. Overall, you should keep all of these factors in mind when trying to predict virtualization performance overhead.
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