Next time you see that, point out that the hardware is itself basically virtualized to monolithic OS's with microcode, shared I/O, and multiplexed buses. A version could work for unikernels if that worked for UNIX. Performance issues come more from how it's applied than the concept itself.
I think you guys might find Arrakis interesting: https://arrakis.cs.washington.edu/ it won Best Paper at OSDI '14 and demonstrates a possible way to better use things like virtio.
