Abstract-Performance unpredictability is one of the major concerns slowing down the migration of mission-critical applications into cloud computing infrastructures [4]. An example of non-intuitive result is the measured n-tier application performance in a virtualized environment that showed increasing workload caused a competing, co-located constant workload to decrease its response time [12]. In this paper, we investigate the sensitivity of measured performance in relation to two factors: (1) consolidated server specification of virtual machine resource availability, and (2) burstiness of n-tier application workload. Our first and surprising finding is that specifying a complete isolation, e.g., 50-50 even split of CPU between two co-located virtual machines (VMs) results in significantly lower performance compared to a fully-shared allocation, e.g., up to 100% CPU for both co-located VMs. This happens even at relatively modest resource utilization levels (e.g., 40% CPU in the VMs). Second, we found that an increasingly bursty workload also increases the performance loss among the consolidated servers, even at similarly modest utilization levels (e.g., 70% overall). A potential solution to the first problem (performance loss due to resource allocation) is crosstier-priority scheduling (giving higher priority to shorter jobs), which can reduce the performance loss by a factor of two in our experiments. In contrast, bursty workloads are a more difficult problem: our measurements show they affect both the isolation and sharing strategies in virtual machine resource allocation.