The Single Most Important Virtual Machine Performance Tip
Wednesday, 01 November 2006 by Michel Roth
What we probably all knew now has a dedicated newspost just for itself, like it deserves: "If you use virtual machines at all, you should have the single most important virtual machine performance tip committed to heart by now: always run your virtual machines from a separate physical hard drive"

The biggest performance win is to put the virtual hard disks on separate disk spindles from the operating system. The biggest performance hit in virtual machines is disk I/O. Making the VM fight with your OS and swap disk makes this issue much, much worse. Additionally, today's USB 2.0 and firewire external hard drives run on a fast interface bus, have large buffers and spin at 7,200 rpm, as opposed to 4,200 rpm for most laptop hard drives.

This article goes on to discuss more in depth configuration here.

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