There are two types of hypervisors: type 1 and type 2 hypervisor.

In type 1 hypervisor (or native hypervisor), the hypervisor is installed directly on the physical server (so it is called “bare metal” approach). Then instances of an operating system (OS) are installed on the hypervisor. Type 1 hypervisor has direct access to the hardware resources. Therefore they are more efficient than hosted architectures. Some examples of type 1 hypervisor are VMware vSphere/ESXi, Oracle VM Server, KVM and Microsoft Hyper-V. Type 1 hyperviors are usually usually used on enterprise servers and data center networking devices.

In contrast to type 1 hypervisor, a type 2 hypervisor (or hosted hypervisor) runs on top of an operating system and not the physical hardware directly. A big advantage of Type 2 hypervisors is that management console software is not required. Examples of type 2 hypervisor are VMware Workstation (which can run on Windows, Mac and Linux) or Microsoft Virtual PC (only runs on Windows).