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There are a lot of parallels between VM/CMS and a microkernel with a service built specifically to host an application. They are very different beasts at their core (a microkernel is built to connect services and a hypervisor to segregate them), but they solve similar problems in sometimes similar ways.

You seem to be talking about Service Virtual Machines:


A Service VM is one where an application runs directly on the 'bare metal' provided by the VM (that is, the whole point of a VM is to multiplex the hardware; it provides few or no abstractions as such). There's no guest OS as you'd think of one.

This idea also exists in exokernel designs:



In an exokernel, the guest OS is reduced to a library, like libc, which is (ideally) optimized for the specific application: Emacs has its own, Apache has its own, and so on. It's a half-step removed from the Service VM idea in that the applications themselves would still get to use the OS abstractions, unaware that the OS is basically gone.

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