Network virtualization is the process of combining hardware and software network resources and network functionality into a single, software-based administrative entity, called a virtual network. Network virtualization involves platform virtualization, often combined with resource virtualization.

Network virtualization is categorized as either external, combining many networks, or parts of networks, into a virtual unit, or internal, providing network-like functionality to the software containers on a single system.

There are two main types of network virtualization:

• External network virtualization: External network virtualization combines many networks, or parts of networks, into a virtual unit. This can be done by using a variety of techniques, such as VLANs, VPNs, and MPLS.
• Internal network virtualization: Internal network virtualization provides network-like functionality to the software containers on a single system. This can be done by using a variety of techniques, such as Xen, KVM, and Hyper-V.

A VLAN is a virtual LAN. A VLAN is a logical grouping of devices on a network. VLANs can be used to segment a network into smaller, more manageable parts. VLANs can also be used to improve security by isolating the different segments of the network from each other.

A VPN is a virtual private network. A VPN is a network that uses a public network, such as the internet, to connect to a private network. VPNs can be used to securely connect to a remote network.

MPLS is a multiprotocol label switching. MPLS is a routing technique that directs data from one node to the next based on short path labels rather than long network addresses, avoiding complex lookups in a routing table.

• Flexibility: Network virtualization can make a network more flexible. This is because it allows you to create and manage virtual networks without having to change the physical network.
• Agility: Network virtualization can make a network more agile. This is because it allows you to quickly and easily provision and de-provision virtual networks.
• Cost savings: Network virtualization can save you money. This is because it allows you to consolidate your network hardware and to reduce your power consumption.

• Complexity: Network virtualization can be complex to set up and manage.
• Security: Network virtualization can be a security risk.
• Performance: Network virtualization can have a negative impact on performance.