Where I work we use Parallels Virtuozzo for a private cloud. I can see why more companies don't use it for public clouds-- you do run into a few weird edge case

Where I work we use Parallels Virtuozzo for a private cloud. I can see why more companies don't use it for public clouds-- you do run into a few weird edge cases with containers vs. full VMs and these would be a tech support issue for a large-scale hosted. But the density you achieve with it is at least one order of magnitude better than KVM, possibly two, and the performance is also better. There is zero I/O overhead since you are in fact running bare-metal, so it's very good for high-performance computing (one of our use cases). Most of the edge cases you do encounter are due to poorly-written software. The most common thing is server software that depends on Linux's default overcommit behavior and malloc() never failing and then uses that to try to badly implement a memory-sensitive cache in competition with the kernel. Containers change overcommit behavior and malloc() CAN fail, so such software will eat all the memory in a container and barf. But there are hacks to get around this, and it's mostly an issue with POS rube goldberg machine web stacks like Apache/mod_php. I've been following LXC for a while and see that some people are now using it in production. Once Linux has a main-line kernel container solution I think you'll see it used quite a bit more. Eventually the developers of crappy server code will be forced to fix their code to behave properly.