Virtualization has gained great popularity in recent years with application virtualization being the latest trend. Application virtualization offers several benefits for application management, especially for larger and dynamic deployment scenarios. In this paper, we initially introduce the common application virtualization principles before we evaluate the security of Microsoft App-V and VMware ThinApp application virtualization environments with respect to external security threats. We compare different user account privileges and levels of sandboxing for virtualized applications. Furtherwmore, we identify the major security risks as well as trade-offs with ease of use that result from the virtualization of applications.