A Virtual Machine is a software abstraction implemented on top of a "real" hardware platform and operating system. This environment is achieved by using real devices (processors, memory, I/O devices and network systems) to create multiple virtual systems each one of which is able to run independently as a copy of operating system.
Virtual machine technology allows hardware differences to be hidden from legacy software, and allows multiple incompatible computing environments to co-exist on a machine. This adds flexibility through cross-platform software portability and can also provide performance optimization.

This concept was created by IBM as a method of time-sharing expensive mainframe hardware. IBM, defines "virtual machines'' as a fully protected and isolated copy of the underlying physical machine's hardware. This gives each virtual machine user the impression of having a dedicated physical machine. Software developers can also write and test programs without fear of crashing the physical machine and affecting the other users.

Virtual machines provide safety assurance, dynamic extensibility, on-the-fly resource allocation, configurable security policies, and resource management facilities.

Overall, a virtualized environment provides simplified access to data and IT resources on demand. Idle capacity can be used to meet unforeseen demand and to reduce the need to purchase additional hardware and software. The savings realized from reduced capital expenditures can be reinvested in other areas to help grow the business.

Achieving native machine performance is a prime target of virtual machine technology. The ability to execute virtual machine code directly on the hardware allows the technology to outperform other technologies based on machine simulation or emulation.