VHD is an acronym for Virtual Hard Disk. Files that have the .vhd file extension contain disk images that are used by the Microsoft Virtual Server. The VHD file stores data within an individual file and acts in the same was as a physical hard disk.
VHD files are commonly used to install multiple operating systems on a single hard drive and to test various software applications.
The .vhd file extension is also used with the Windows Vista operating system for backups of a user's PC. These VHD files can be used to restore individual directories on a user's computer or the entire computer hard drive if needed.
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