Virtualisation technologies: KVM, Xen and containers

If you have ever tried to purchase a VPS service or set up a virtual server, you have certainly come across terms like KVM, Xen, or OpenVZ. But do you know how these technologies differ and why choosing the type of virtualization directly affects performance, security, and even the price you pay?

Many users only look at RAM and CPU when buying a VPS and simply overlook the type of hypervisor. This common mistake can cause problems later on; for example, when your service suddenly slows down under heavy load, or when you realize you cannot install the Linux kernel you want. In this article, we intend to examine, in simple but precise language, the architecture of three main approaches — full virtualization with KVM and Xen, and operating system-level virtualization with containers — and explain which one is more suitable for each type of user.

What is Full Virtualization?

In full virtualization, a software layer called a hypervisor is installed directly on the physical hardware (or runs on the host operating system) and divides hardware resources among multiple virtual machines (VMs). Each VM has a complete and independent operating system and believes it is running on real hardware. This way, you can run several virtual servers with different operating systems (e.g., Ubuntu and CentOS) on a single physical server.

Two open-source hypervisors that are very common in data centers are KVM and Xen. Both belong to the Linux family, but they have different internal architectures.

KVM: Integrated Virtualization with Linux

KVM (short for Kernel-based Virtual Machine) has been integrated into the Linux kernel as a module since version 2.6.20. That is, instead of being a separate piece of software, it is part of the kernel itself. This means that if your physical server runs Linux, you can immediately take advantage of hardware virtualization features (Intel VT-x or AMD-V) by loading the kvm_intel or kvm_amd modules.

The main advantage of KVM is that it benefits from all Linux drivers, and kernel updates are applied directly to it. Tools such as libvirt and virsh are used to manage VMs. Here is a simple example of creating a VM with virsh:

virsh vol-create-as default disk.qcow2 20G --format qcow2
virt-install \
  --name my-vps \
  --ram 2048 \
  --vcpus 2 \
  --disk path=/var/lib/libvirt/images/disk.qcow2 \
  --os-variant ubuntu22.04 \
  --network network=default \
  --graphics none

Important note: KVM uses hardware virtualization by default, meaning CPU instructions are executed directly without software translation. This means you get performance very close to that of a physical server.

Xen: A Lightweight and Secure Hypervisor

Xen has a longer history than KVM and was originally developed at the University of Cambridge. Xen's architecture is different: a thin layer called Domain 0 (or Dom0) runs directly on the hardware and is responsible for managing other virtual machines (called Domain U). Dom0 is typically a small Linux system that runs management tools such as xl or xm.

Xen has two execution modes: PV (Paravirtualization) and HVM (Hardware-assisted Virtualization). In PV mode, the guest operating system is aware that it is running in a virtualized environment and uses special drivers that provide higher performance. In HVM mode, hardware capabilities are used, similar to KVM.

An important technical note: in Xen with PV mode, the Linux kernel must be compiled with Xen-specific patches. For this reason, some modern distributions have dropped PV support and only offer HVM. If your VPS uses Xen PV, you probably cannot install the latest version of Ubuntu or Debian.

Containers: Operating System-Level Virtualization

Containers take a different approach. Instead of virtualizing hardware, they share the host operating system kernel among several isolated environments. Each container only includes its own application, libraries, and dependencies, and does not have an independent operating system. The most well-known container technologies are Docker and LXC.

In containers, processes run directly on the host kernel and use features such as namespaces and cgroups for isolation. For this reason, the overhead is very low, and you can run dozens of containers on a single server.

Key Difference: Isolation and Performance

For a better understanding, consider this comparison table:

• Isolation: In KVM and Xen, each VM has an independent kernel; an error in one does not spread to another. In containers, all share a common kernel; a bug in the kernel can affect all containers.
• Performance: Containers run with almost no overhead (close to 98% of host performance). KVM provides about 90–95%, and Xen, depending on the mode, provides between 85% and 95% performance.
• Boot time: A VM with KVM typically boots in 30 to 60 seconds, while a container comes up in less than 1 second.
• RAM usage: Each VM with KVM consumes at least 512MB to 1GB of RAM for the operating system, but a Docker container may only consume 10 to 50MB.
• Operating system flexibility: With KVM, you can install Windows, FreeBSD, or any operating system you want. With containers, you can only use Linux distributions that are compatible with the host kernel.

The Impact of Virtualization Technology on VPS Performance

Now the main question: which technology is more suitable for your VPS? The answer depends on the type of workload you have.

When is KVM the Better Choice?

If you are looking for a VPS with stable and predictable performance, KVM is a safe choice. Especially if:

• You need to install a custom Linux kernel (for example, for network optimization or security).
• You want to run Windows or a non-Linux operating system.
• Your application requires direct access to hardware (such as GPU or USB devices).
• You need strong isolation; for example, for hosting multiple high-traffic websites.

In KVM, resources are allocated at the hardware level, and neighbor noise has less impact on you.

When is Xen the Better Choice?

Xen is still used in some data centers, but due to management complexity and reduced support from modern distributions, its popularity has declined. If your VPS is provided with Xen, make sure it is in HVM mode, not PV. In PV mode, you may encounter the following problems:

• You cannot install the latest Linux kernel version.
• Some kernel modules (such as new network drivers) are not available.
• Disk I/O performance is usually lower than KVM.

In general, if you have the choice between KVM and Xen, KVM is the more modern and reliable option.

When are Containers (Docker) Suitable?

Containers are ideal for developers and DevOps teams. If:

• Your application is designed as microservices and consists of several small services.
• You need rapid scalability (for example, in response to increased traffic).
• You want to keep development and production environments identical.
• You are looking to reduce costs; because you can run multiple containers on a small server.

But note: containers are not a good choice for running heavy and stable applications (such as large databases), unless you use Kubernetes and orchestration tools, which come with their own complexities.

Common Mistakes in Choosing Virtualization Technology

Here, we review a few common mistakes users make when choosing a VPS:

Mistake 1: Ignoring the Type of Virtualization When Buying a VPS

Many users only pay attention to price and hardware specifications and do not realize that a cheap VPS may be provided with OpenVZ (an older container technology). With OpenVZ, you cannot change kernel modules, and some applications (such as Docker) do not work properly. Always check the technical specifications before purchasing and make sure the virtualization technology is compatible with your needs.

Mistake 2: Assuming Containers Are Always Better

Containers are fast and lightweight, but they have weaker isolation. If a container has a bug and consumes too much memory, it can affect the entire server. For critical applications, full virtualization provides more security.

Mistake 3: Choosing Xen PV Because of a Lower Price

Some VPS providers offer lower prices with Xen PV, but this saving may come at the cost of losing flexibility and performance. If your application requires a modern kernel, be sure to use HVM or KVM.

Summary: Which Technology Should We Choose?

The choice of virtualization technology should be based on your actual needs, not just price. If you are looking for a versatile VPS with high performance and full flexibility, KVM is the best option. If you are a developer looking to quickly deploy services with minimal resources, Docker or other container technologies are a smart choice. And if you encounter Xen, make sure it is in HVM mode.

Finally, remember that no technology is absolutely the "best"; rather, the best option is the one that aligns with your workload, budget, and level of expertise. If you are just starting out, begin with a KVM-based VPS and later migrate to containers if needed. ServerNet also offers a variety of VPS services with modern virtualization technologies for different needs, allowing you to make a more informed choice based on this guide.