Network virtualization combines hardware and software network resources into a single virtual network. There are two types: external virtualization which combines physically separate LANs or divides a LAN into VLANs, and internal virtualization which virtualizes networking within a single server. Virtualization reduces physical devices needed, allows easy network segmentation, provides rapid scalability and security, and permits failover capabilities. Examples include using VLANs to improve load balancing and segmenting networks to establish security procedures based on roles and locations.