Fault-tolerant describes a computer system or component designed so that, in the event that a component fails, a backup component or procedure can immediately take its place with no loss of service. Fault tolerance can be provided with software, or embedded in hardware, or provided by some combination.
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In the software implementation, the operating system provides an interface that allows a programmer to "checkpoint" critical data at pre-determined points within a transaction. In the hardware implementation (for example, with Stratus and its VOS operating system), the programmer does not need to be aware of the fault-tolerant capabilities of the machine.
At a hardware level, fault tolerance is achieved by duplexing each hardware component. Disks are mirrored. Multiple processors are "lock-stepped" together and their outputs are compared for correctness. When an anomaly occurs, the faulty component is determined and taken out of service, but the machine continues to function as usual.