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A guarantee-aware cost effective virtual machine placement algorithm for the cloud is proposed in this paper. The algorithm is first formulated as a nonlinear programming problem of which the objective is to minimize the number of physical machines used. Specifically, apart from constraints for computing resources, we add an additional one for each network component to ensure the sum of offered guarantees for each link is not greater than the link capacity. We then devise a heuristic algorithm for the nonlinear programming problem. Results show that our approach can reduce the number of physical machines used by 32.5% compared to the most recent one.