Overhead of Servers on VM’s

I was doing a performance tests, and initially trying to run them on virtualized hardware. We ran them first on EC2, then on a Xen based virtualized layer, and finally on real hardware. We observed that the virtualized version is much slower (15 TPS on virtualized vs. 290 TPS on real hardware, almost as 20 times slower!!). Still not sure wheather this applies to servers in general or is this a special case. However, if this is a general result, for servers (which usually has high IO/ CPU overhead) virtualization is really looking bad.

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