Data centers the world over are becoming more abstract by the day. A server used to be a hunk of metal, plastic, and silicon on a raised floor, lovingly assembled by system integrators Dell (Nasdaq: DELL) or IBM (NYSE: IBM).

Each server was usually dedicated to running one -- or, if the CIO felt lucky, more than one -- business-critical application. The hardware and the software were nearly inseparable, and the IT staff became adept at tricky upgrades, disaster recovery, and resource allocation.

With virtual servers, that's all changing. Sure, the physical machines are still there. But the applications don't live in committed, monogamous relationships with their servers anymore. A layer of software abstraction lets you install programs on virtual machines, resulting in more efficient and reliable systems that are cheaper to build and run.

Cheaper and better? No wonder, then, that businesses large and small are jumping onto this bandwagon like fleas at a dog show.

What is virtualization?
Today's virtual server platforms lets system administrators do things they could never do on plain hardware. Got one big server and lots of important software? Slice that server up into a few virtual machines, and dedicate each part to one task. Saddled with a room full of small servers and one big business need? Connect a few machines into one virtual server.

Those slices also provide better control over limited resources. Say you have two applications to run -- one that uses a lot of memory but hardly any processor time, and the other a memory-light, processor-hungry beast. In olden days, each package would probably get a dedicated server and leave a lot of resources unused.

Now, the admin just slices one server into two appropriately dimensioned pieces; one has more memory, and the other has a few extra processors, or a higher CPU use quota. The result is more real-world value for the systems you already paid for.

The benefits don't stop there. Let's say there's a Category 5 hurricane brewing near the Bahamas, and your central server is (however unlikely it may sound) in an Art Deco condo with a splendid sea view on Miami Beach. Bad planning aside, I hope you've virtualized your favorite servers. If you haven't, disaster recovery means building exact clones of your servers somewhere else, restoring a recent backup tape there, and crossing your fingers.

On the other hand, a virtual server image can be bandied about on very different machines. Being less picky about the hardware usually means lower prices and higher availability. System upgrades can be done with hardly any downtime, by simply moving the server image somewhere else for a while. Clone away!

How does that help an investor?
You can see that virtualization is a game-changing technology. IT is being done a new way now, and all sorts of companies benefit from more efficient infrastructure operations. As a Hewlett-Packard (NYSE: HPQ) spokesman says, "The VMware (NYSE: VMW) implementation eliminates a large amount of costs for hardware contracts and ups the utilization of the servers; so HP ends up getting a better bang for the buck."

If you really want to ride this wave hard, look at the companies that make virtual server software and provide support services. VMware is one of the biggest names, ahead of Microsoft (Nasdaq: MSFT) and its Virtual Server/Virtual PC packages. Citrix Systems (Nasdaq: CTXS) jumped into the fray last summer, when it bought open-source alternative XenSource. IBM has virtualization features built into its AIX operating system, and you could argue that Big Blue's mainframes are the granddaddies of the whole virtual concept. Of course, Sun Microsystems' (Nasdaq: JAVA) Solaris can slice and dice, too. The list goes on.

The smaller, more focused companies in that bunch basically live and die by virtual servers, which are just an important hobby for Microsoft and IBM. Pick your investments according to risk tolerance, taste for volatility, and how much you believe in this sector.

Take it away, Fool!
The time is now. Virtualization used to be a concept on the lunatic fringe, the exclusive domain of hardcore geeks and early adopters. Now even CFOs understand that virtualization can boost their numbers, and the global conversion crusade is in full swing.

It's not too late, either. We're still in the early years of this new paradigm, and there's a long way to grow. As a proxy for the new market, VMware's earnings growth is accelerating exponentially, and more likely to speed up than slow down for the next few years. Hop on for the ride.

Further Foolishness:

Dell and Microsoft are two of our Motley Fool Inside Value recommendations, and Dell is also a Motley Fool Stock Advisor pick. With a $30 billion market cap, VMware is too big to fit in a Rule Breakers seat, but virtualization breaks the old rules with gusto and flair. Have a taste of a few newsletter services, free for 30 days each.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, not yet. You can check out Anders' holdings if you like, and Foolish disclosure is your guide to the universe.