Strategy: Devirtualize for More Vroom
Virtualization offers a lot of benefits, but it also comes with a cost (memory, CPU, network, IO, licensing). If you are in or running a cloud then some form of virtualization may not even be an option. But if you are running your own string of servers you can choose to go without. Free will and all that. Should you or shouldn't you?
In a detailed comparison the folks at 37signals found that running their Rails application servers without virtualization resulted in A 66% reduction in the response time while handling multiples of the traffic is beyond what I expected.
As is common 37signals runs their big database servers without virtualization. They use a scale-up approach at the database tier so extracting every bit of performance out of those servers is key. Application servers typically use a scale-out approach for scalability, which is virtualization friendly, but that says nothing about performance.
Finding performance increases, especially when you are running on a dynamic language is a challenge. The improvements found by 37signals were significant. Something to consider when you are casting around wondering how you can get more bang for your buck.