The non-Mac world has had VMWare’s bare metal hypervisors for some time now. Not so long ago, Apple made it legally possible to virtualize specific versions of Mac OS X. Around the same time Parallels introduced their own bare metal hypervisor designed specifically for Apple hardware. This would make it possible to turn a single Xserve into a more productive system that can host several independent instances of Mac OS X Server for various purposes (file shares, netboot, open directory masters, software update servers, remote desktop servers, etc).
See: http://www.parallels.com/products/server/mac/baremetal/