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Virtualization is a way to make more efficient use of today’s high-performance CPUs, by letting you run multiple servers on the same hardware. One or more virtual – guest servers share computing resources under the control of a hypervisor. More servers on a machine reduces the need for physical servers, which reduces hardware, space and power costs. Virtual servers can also be moved across physical systems to further align available resources with demand
Cloud computing is a service that relies on a highly virtualized physical infrastructure. In the cloud, applications generally run on virtual servers that are independent of the underlying hardware. (Indeed, a virtual server environment for your application can be one of the services a cloud computing provider offers.) But there’s more to the cloud than virtualization, in that cloud computing is based on the concept of a “utility computing” service, where RAM, CPU cycles, storage and network bandwidth are commodities to be consumed on a “pay per use” basis, like water or electricity. A cloud computing environment relies on many physical and virtual servers. It is configured in both hardware and software to provide high reliability and availability. Clouds are also very flexible and scalable, in the sense that an application can simply consume resources as needed.
Virtualization lets you reduce the cost and complexity of your IT infrastructure by maximizing the utilization of your physical computing resources. But you still need to purchase and maintain servers and software. Multiple virtual servers all share a single network connection which requires optimal performance.
The benefit of cloud computing is that the provider takes care of the infrastructure your application runs on. You can eliminate the start up costs associated with hardware. But that’s only a benefit if the provider does a good job. Now all your applications are dependant on the performance of a single WAN link. It is possible to lose data, as well as access to business-critical services, when cloud services fail.
As Salesforce.com CEO Marc Benioff recently pointed out, virtualization is a software-based technology. “They have versions with numbers after it. That is when you know you are dealing with software; if you hear about versions, you know you are not in the cloud.” Cloud computing is a service that goes beyond what software alone can provide.