Quoting ZDNet Asia

As server virtualization gains traction and becomes more common, more and more organizations are reaping the significant benefits that can be realized by making better use of cheap x86-based servers.

If you're considering "virtualizing" some of your various Windows servers to cut down on costs, reduce heat emissions, use less power, and so forth, you might include your Exchange servers in your strategy. Strictly speaking, Microsoft supports running Exchange in a virtual environment, but only with some significant caveats:

• If you want support, don't bother using VMware. Microsoft will only support Exchange 2003 if you're running Virtual Server 2005 R2 or better.
• You must be running Exchange 2003 Service Pack inside the virtual server.
• You must use virtual machine additions. Microsoft makes this a requirement, but should be a requirement for all of your virtual machines anyway.
• Your Exchange server can't be a part of a cluster.
• The guest operating system (on which you install Exchange) must use the Microsoft Virtual Machine PCI SCSI Controller driver.

Before you virtualize any of your existing servers, I highly recommend that you use Performance Monitor to make sure that the server is a candidate for virtualization. If, for example, your Exchange server stays peaked at 95 percent utilization on a dual processor, dual core 3GHz system with 4 GB of RAM, and you've verified that this utilization is due to load and not a problem, don't even think about virtualizing such an overworked server.

Bear in mind that guest operating systems under Virtual Server 2005 R2 are limited to only one processor, so your scaling opportunities are somewhat limited. However, virtualizing your Exchange server may be just the ticket if you're upgrading to new, seriously overpowered hardware and you want to undertake a reasonable server consolidation project.

The original article can be found, here.