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I'm not sure about database servers, but app servers can be virtual.
What I can say is, this really depends on the requirements of deployment as well as other factors, because "One size does not fit all".
If you talk about performance of Essbase, its definitely best on Physical Servers with SAN or similar drives, as Essbase requires high disk I/O performance.
Hope this helps.
I agree with "One size does not fit all" and I also had in mind the I/O performance too… Have you tested Essbase in virtual server?