A computer system with a hypervisor detects the local physical connection of a portable storage device with an operating system image thereon. The computer system installs an instance of the operating system on the hypervisor, and the hypervisor assigns a set of resources to the instance to generate a virtual machine. As further portable storage devices with operating systems thereon are locally, physically connected to the computer system, additional virtual machines are generated, each with a different operating system instance, which may be the same or different from the other operating system instances. The resources of the computer system are assigned and reassigned among the virtual machines as the portable storage devices are connected and disconnected.