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OpenVZ and Xen use different virtualization approaches: OpenVZ uses OS level virtualization, while Xen uses paravirtualization. This is a pretty significant difference and proponents of each will argue it to their advantage. OpenVZ folks will say their approach allows for better resource usage and density. We feel paravirtualization provides good resource usage and superb isolation. Translation: your neighbor can’t bring the whole box down.
Xen also requires fixed memory and disk definitions, OpenVZ allows for burstable memory usage. That is the biggest difference you will see, burstable memory rates on Virtuozzo offerings, whereas Xen has hard, fixed caps. Burstable memory is great if you have control over all of the virtual servers (everyone is friendly), but when you have a diverse environment like ours, we prefer hard memory caps (you get what you pay for).
I think in general providers would prefer OpenVZ, but users would prefer Xen. The reason? "Control"
At work we have one beefy box for our developers, and it is segmented with OpenVZ. While giving them root access, I also want to have full controls over building their tool-chains, packages, basic configurations, etc. As all VPS on an OpenVZ host node are sitting under the same file system, it is very easy for admins to write a deployment script to alter everyone's VPS. Also although you give each VPS a "guaranteed" memory, not everyone is going to use all that all the time. Therefore in OpenVZ it is possible to subscribe more users to a server than Xen would, i.e. overselling. Not that it is always a bad thing. Sometimes you just need to get one more VPS up and running but your new Dell PowerEdge hasn't been delivered... Under OpenVZ you can always "squeeze" that one in.
Xen on the other hand gives users much more control over how his/her VPS is going to behave. Kernel swapiness? Customised iptables module? A different file system? Also a kernel level local exploit will only bring down your node, not everyone else's.
I ditched a Virtuozzo provider (JohnCompanies.com) - they were knowledgeable and friendly, but I like Xen better. In particular, on Virtuozzo/OpenVZ, your total available RAM is not the whole story. There's also a much smaller kmemsize limit. My old provider said they had it set according to swsoft's recommendation, which apparently is miserly. Lots of system calls failed due to running out of memory. I'm able to do much more with a physical or Xen system with the same amount of RAM.
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