Hardware virtualization is when the virtual machine manager is embedded in the circuits of a hardware component instead of being called up from a third-party software application. The virtual machine manager is called a hypervisor.
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The job of the hypervisor is to control processor, memory and other firmware resources. The hypervisor acts like a traffic cop, allowing multiple operating systems to run on the same device without requiring source code or binary changes. Each operating system appears to have the processor, memory, and other firmware resources all to itself -- but in reality, the hypervisor is controlling the processor and its resources, allocating what is needed to each operating system in turn.
Hardware virtualization is an evolving technology that may become dominant, especially for server platforms, because it has the potential to facilitate the consolidation of multiple workloads on a single physical server without requiring third-party software.