Why is virtualization a cost-effective solution for server management?

Virtualization is considered a cost-effective solution for server management primarily because it allows multiple virtual servers to run on a single physical server. This consolidation significantly reduces the number of physical servers needed in an organization, which in turn decreases hardware costs, energy consumption, and space requirements in data centers. By optimizing the use of existing hardware resources, organizations can achieve greater efficiency and lower overall expenses associated with maintaining and operating physical servers.

The other options, while they may have their own benefits, do not directly address the financial advantages associated with server management brought about by virtualization. Enhanced physical server security and increased power do not specifically reduce costs directly tied to server acquisition and maintenance, and user interface design simplification is more relevant to software than server management itself. This makes the option regarding reduced hardware requirements the most accurate choice when discussing the cost-effectiveness of virtualization.