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What is the advantage of virtualization compared to dual-booting?
In basic terms, the primary advantage of virtualization is that it allows one to run multiple operating systems "inside" or "alongside", if you prefer, another one.
For example, you could run Windows "inside" MacOS X rather than booting back and forth between them. Indirectly, virtualization also can allow you to copy and paste between operating systems, a major advantage for productivity applications.
Virtualization is slower than directly booting an operating system, and consequently, is not generally considered an ideal solution for gamers. However, Parallels Desktop for Mac 3.0 (and higher) supports DirectX and OpenGL and a number of games have been tested and found to work, VMWare Fusion 1.1 (and higher) supports "select games" and CodeWeavers Crossover Mac supports some games as well, but booting directly into Windows with an Intel-based Mac remains the way to obtain the best performance for Windows games.
Also see: How does the performance of Parallels Desktop for Mac 5 compare to VMWare Fusion 3? How does the performance compare for productivity applications? How does it compare for games?
Parallels Desktop for Mac supports effectively every version of Windows, as well as Linux, FreeBSD, OpenBSD, OS/2 Warp, eComStation, Solaris, and MS-DOS "in secure virtual machines running alongside Mac OS X".
Parallels provides extensive documentation and video tutorials to walk you through the process of installing Desktop for Mac and subsequently Windows in a "virtual machine".
Parallels Desktop for Mac installs drivers for a variety of hardware and support becomes more extensive as time goes on. However, not every device on the planet is supported. If you require complete hardware compatibility, you might be better served running Windows via Boot Camp.
The final versions of Parallels Desktop for Mac include an easy to use uninstaller program.
Apart from not supporting some hardware devices, Windows is fully functional running a final version of Parallels Desktop for Mac.
Yes. Starting with beta 3036, Parallels Desktop for Mac has had the ability to "drag and drop" files between MacOS X and Windows.