What is the Difference Between Cloud Computing and Virtualization?

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  • Written By: Robert Grimmick
  • Edited By: R. Halprin
  • Last Modified Date: 10 November 2019
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Cloud computing and virtualization are two approaches to computing that attempt to make more efficient use of computer hardware. Cloud computing is a form of Internet-based computing that delivers resources such as storage space and processing time on a pay-per-use basis. Virtualization creates simulated resources and allows a single piece of hardware to deliver multiple services at once. Both options can save money by using computer hardware more efficiently. The primary difference between the two is that the physical resources that power cloud computing are owned by a cloud service provider, while a corporation that uses virtualization still maintains servers and computer hardware in its own data centers.

The basic premise behind cloud computing, which is similar to the earlier concept of utility computing, is that computing resources can be turned into commodities and delivered over the Internet. A company or individual can then use these resources on a metered basis, thereby paying only for the processing power and storage consumed. Large capital investments in computer hardware are left to the providers of cloud services, who exploit economies of scale by offering their services to many different clients. By turning to a cloud service provider, a company’s need for in-house information technology (IT) support staff may shrink.


Virtualization is a collection of technologies that allow simulated computing resources to be substituted for more costly physical resources. Many organizations have used this approach to consolidate many different servers onto a single piece of physical hardware that presents a simulated set of hardware to two or more operating systems. Virtualization can take place in many different ways and in some cases it looks a lot like cloud computing. A virtualized file system, for example, lumps a number of physical hard drives into a single virtual disk. Businesses often regard cloud computing and virtualization as two distinct options, but many cloud providers extensively use virtualization in their own data centers.

Both cloud computing and virtualization can save money by using computing resources in more efficient ways. In the past, the servers and computers of many businesses would be fully utilized only for very brief periods of high demand and remain underutilized most of the time. Cloud computing and virtualization services more efficiently balance the demand and supply of resources, thus allowing computer hardware to meet its highest potential.

A key difference between cloud computing and virtualization is where the physical computing resources reside. Companies that purchase resources from the cloud have to depend on a third party to manage and secure their data, while virtualization can take place within an organization’s own facility. For businesses that have a desire or need to maintain physical control over their data, a private cloud with many of the same benefits as a public cloud can be constructed within an enterprise data center or corporate network. Some companies have also started using a “hybrid cloud” that outsources non-critical services and data to cloud providers while keeping more sensitive material in house.

One advantage for a company using public cloud computing is the ability to rapidly expand its use of computing resources. There is no physical hardware to purchase, install, or maintain and additional resources can be purchased from the cloud provider almost instantaneously. This dynamic scalability is a strategic advantage for quickly growing small and medium businesses. Virtualized services can be enabled and disabled to deal with some changes in demand, but are ultimately limited by the power of the computer hardware they are running on.


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