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As was announced, Windows 8 will have Hyper-V built in, and some people are much excited about that.

I can use Microsoft Virtual PC on Win 7 even now, how Hyper-V will make user experience better? Can anybody explain in simple terms?

Edit: I understand that Hyper-V is "closer to the metal" - but besides performance (BTW, what is the estimated performance gain?) is there any functionality that you gain by using Hyper-V? I can use network and USB from a Virtual PC...

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Just like any feature, it's not useful if you'll never use it. But the architectural changes that were necessary to get us here in the first place is useful. – surfasb Nov 2 '11 at 4:53

Virtual PC is a type 2 hypervisor, Hyper-V is a type 1 hypervisor the difference is illustrated here :

enter image description here

There are less layers which means better performances. Also, see Rory's answer.

P.S: Image was taken from Wikipedia

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This will only be of interest to you if you run virtual machines. For those that do, having a native hypervisor is very useful in terms of connectivity, enforcing separation of virtual machines, tear down and rebuild of VM's as these processes can be run at a lower level in the OS and effectively see their environment as much closer to the real world.

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