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Monolithic hypervizor
In the monolithic model of Type 1 virtualization, the hypervizor has it’s own drivers for accessing the hardware beneath it. Guest OSs run in VMs on the top of the hypervizor, and when a guest needs to access hardware it does so through the hypervizor and it’s driver model. Typically, one of these guest OSs is the administrator or console OS within which you run the tools that provision, manage, and monitor all guest OSs running on the system. The monolithic hypervizor model provides excellent performance, but it can have weaknesses in the areas of security and stability.
This is because the model inherently has a greater attack surface and much greater potential for security concerns due to the fact that drivers runs in the very sensitive area.
The other problem is stability – if a driver were updated in the hypervizor and the new driver had a bug in it, the whole system would be affected, including all it’s virtual machines.
This model is very good, but because of the security and stability problems it is not being used in Windows Server 2008 or in WMWare ESX.
Resources:
Type 1 virtualization
Hybrid virtualization
Type 2 virtualization
Does server virtualization reduce costs?
Why should you use OS virtualization?
Virtualization today
Virtualization on brajkovic.info
Introducing Windows Server 2008 by Mitch Tulluch

