Improving backup operations and reducing the storage costs involved in server virtualization are key to the successful expansion of virtualization across an organization. Leveraging the game changing aspects of deduplication in VMware environments can address not only the aforementioned pain points and barriers to expansion, but can also offer a strong Return on Investment (ROl) and significantly reduce the Total Cost of Ownership (TCO) of virtual and physical data protection. This paper examines and quantifies the costs and benefits of deduplication in VMware environments.