Virtualization is the basis on which cloud computing is built, and refers to the creation of a virtual (rather than physical) version of something; in computing, this means using specialized software to create virtual versions of operating systems, servers, network resources or storage devices.

Virtualization solutions include VMware, which specializes in the virtualization of servers, desktops, networks and storage. Microsoft’s Hyper-V virtualization solution integrates with Windows and provides virtual versions of servers and desktop computers.
Virtualization is fundamental to cloud computing, since it allows several operating systems and applications to run on the same server at the same time. In combination with a cloud infrastructure provider, virtualization enables organizations to make more efficient use of their IT resources.
Through the use of software, virtualization can divide the physical components of a single computer, such as its processors, memory, storage, and other components, into several virtual computers, also known as virtual machines (VMs). Despite only using a small percentage of the real underlying computer hardware, each virtual machine (VM) runs its own operating system (OS) and functions like a separate computer.