When you order a dedicated server, you have the option to "virtualize" the server into a number of virtual machines or VMs. Essentially, this is a way to slice up your dedicated server into a number of virtual servers where each VM behaves as if it were a stand-alone server.
Say that you need to host 3 applications where each application must run on a separate computer (they cannot share a server with other applications). You could go out and purchase 3 physical servers and install an application on each server. Each application, however, may be idle much of the time utilizing only 20 percent of the server's potential. Instead, you can virtualize a single physical server into 3 VMs and then install an application on each VM. Multiple VMs share hardware resources without interfering with each other so you can safely run several operating systems and applications at the same time on a single computer.
Together, the applications now utilize 60 percent of the physical computer on which they are hosted. A virtualized dedicated server used in this way is a more efficient use of the computer's resources and thus significantly reduces the cost of hosting the applications.
We use VMware's ESX Server platform to virtualize the hardware resources of a server which includes the CPU, RAM, hard disk and network controller to create a number of fully functional VMs that can run their own operating system and applications just a like a "real" computer.
