In the latest edition of VMware's blogsite "Virtually There", Steve Herrod (Vice President of Technology at VMware) discusses one of VMware's product obsessions - performance.  Throughout his post, he discusses how the latest ESX Server version, 3.0 has increased its overall performance and how it then translates into higher overall efficiency, higher consolidation ratios, lower power usage and leads to faster individual applications.

Quoting from his blog post:

First, we've sped up memory management unit (MMU) operations inside virtual machines. In particular, we've decreased latencies of key operations such as page faults and context switches. This benefits almost every workload, and in particular process-heavy ones such as Terminal Services, Databases, and many enterprise applications. Such applications often require large amounts of memory, and virtual machines can now use up to 16 GB of memory by enabling Physical Address Extensions (PAE) within the guest operating system. In ESX 3.0 we improved PAE performance so that there is negligible overhead when running with PAE enabled. We've also added a number of optimizations to improve the performance of applications on Linux guests. In particular, we've optimized our handling of the Linux Native Posix Thread Library (NPTL).

In addition to these targeted optimizations we've made many other changes that we expect to result in better performance overall. While the single VM performance improvements focused on CPU and memory, we have also made a number of improvements to I/O performance. We've optimized our guest virtual Ethernet adapter (vmxnet), improved VM to VM networking and re-architected our networking layer for ESX 3.0. This helps workloads such as multi-tiered applications and web servers. On the storage side, we've introduced VMFS3: a new, more scalable, distributed file system that includes enhanced file locking and improved caching to support large numbers of VMs. For the new storage options (NFS and iSCSI) we worked to ensure that the performance is up to the standard that our customers have come to expect.

In light of advances in multi-core technology, we also focused explicitly on improved scalability on a single machine. We introduced "userworlds", which allow us to run our user level virtualization components on any processor and no longer only on the Service Console. This improves scalability by reducing the demands on the Service Console, and increases the limit on the number of simultaneous VMs you can run by 50% over ESX 2.5. Below is a graph illustrating the type of benefit available due to this optimization. In this example (run on an 8-way server with 16GB of physical RAM), we can see that the time required to boot a Windows 2000 virtual machine does not dramatically increase even as you move beyond 100 instances. Different workloads will of course have different profiles, but the core scalability improvements (coupled with our continued focus on advanced resource management) should benefit most users.

And there is more... read the entire article, here. 

In addition, check out his graphical chart depicting how many Windows 2000 Server virtual machines can be booted within a certain amount of time, showing both ESX 2.5 and ESX 3.0.  Amazing!