This is a great question, and it concerns finding the right virtualization tool for various jobs. Most of the current buzz is around server virtualization products such as Microsoft Virtual Server 2005 and VMware's platform. These solutions allow you to run multiple operating systems concurrently on the same hardware. Server virtualization is best for complex applications that require extensive configuration and system configuration.
Another approach to virtualization is that of allowing multiple applications to run concurrently on the same operating system. This is the general approach taken by SWSoft and other vendors. The idea here is that, for simpler applications, there's no need to run separate operating systems for each. The result is lower overhead, while still allow isolation for users.
The overall goal is to determine the best solution for your workload. Are you running a simple desktop application that must be installed multiple times? If so, application-level virtualization might be the most efficient way to go. On the other hand, if you're running complex multi-tier application suites, you might need to use dedicated virtual machines for the task. That's best-suited for server-level virtualization. I hope this helps you get a high-level idea of the options available!
Note: I'm currently working on an article and webcast on the same topic, so keep your eyes on SearchServerVirtualization.com for more details!
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