Server consolidation, by running multiple virtual machines on top of a single platform with virtualization, provides an efficient solu-tion to parallelism and utilization of modern multi-core processors system. However, the performance and scalability of server con-solidation solution on modern massive advanced server is not well addressed. In this paper, we conduct a comprehensive study of Xen per-formance and scalability characterization running SPECvirt_sc2010, and identify that large memory and cache footprint, due to the unnecessary high frequent context switch, introduce additional challenges to the system performance and scalability. We propose two optimizations (dynamically-allocable tasklets and context-switch rate controller) to improve the performance. The results show the improved memory and cache efficiency with a reduction of the overall CPI, resulting in an improvement of server consolidation capability by 15% in SPECvirt_sc2010. In the meantime, our optimization achieves an up to 50% acceleration of service response, which greatly improves the QoS of Xen virtualization solution.