Network virtualization refers to consolidating hardware and software functionality into a single network controlled via one virtual machine (VM). The VM simulates traditional hardware, albeit only limited to forwarding packets that contain instructions the virtual network carries out.

Network virtualization can either be implemented externally or internally. External virtualization involves combining a host of local networks or parts of them into a single host to improve efficiency. Internal virtualization, meanwhile, uses software containers (software units that house code and related programs) to provide network-like functionality through a single server.

To answer the question “What is network virtualization?” therefore. We can say it gives administrators the capability to run a network even if it is disconnected from the hardware.

Other interesting terms…

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Most organizations now use cloud technologies to achieve network virtualization. Cloud virtualization follows the same basic idea but uses cloud-based resources (typically operated by third-party providers) to create a functional virtual network.

Does Network Virtualization Have Advantages?

Network virtualization offers benefits that include:

Reducing Hardware and Power Consumption

One positive impact of network virtualization is eliminating the need for additional physical hardware within an office. By combining the power of multiple servers and storage devices into one host machine, organizations can tremendously cut down on space and cost requirements. That also translates to a dramatically lower power consumption.

Improving IT Productivity

Network virtualization allows organizations to scale operations quickly. By merely powering up more VMs, all staff can handle as much data as they need to, without purchasing additional hardware.

Boosting Security

Another advantage of network virtualization is providing organizations better control of the traffic that flows into and out of physical networks. They can easily detect and combat security threats because they can see all network resources in one management console.

Network virtualization also enables micro-segmentation, which lets organizations store the most sensitive data within specific VMs that only authorized users can access.

Enhancing Disaster Recovery

Should hardware failures occur, network virtualization eliminates outages and enhances recovery time. With traditional hardware, time-consuming disaster recovery procedures, such as changing Internet Protocol (IP) addresses and updating firewalls, are often done manually. Virtualized networks have done away with that.

Enabling Quick Application Implementation

Software deployment is a rigorous process. Before organizations can run applications network-wide, it needs to go through several testing rounds to ensure it will not interfere with or corrupt established procedures.

To hasten deployment, tests can first be run on VMs. Only when the software works can it be deployed to physical hardware, thus reducing time spent on testing and debugging.

Common Network Virtualization Applications

Below are two widely implemented network virtualization options.


A virtual local area network (VLAN) is a consolidated network of machines that do not necessarily have to be located in a single physical location. Its use significantly improves the speed and performance of dynamic systems because it distributes load to several machines. It also simplifies network change and addition management.

Overlay Network

An overlay network is a telecommunications network built on top of another. As such, it is supported by the same network infrastructure, but it can segregate services from the underlying infrastructure, allowing connected devices to work faster.

As you have seen from our answer to the question “What is network virtualization?” it may seem apparent that organizations looking to scale their operations have much to gain from the process. Not only can they get a quicker turnaround, but they also enjoy management automation. In sum, network virtualization lets organizations respond to market demands with agility, thus significantly increasing their bottom line.