1. A method of archiving virtual machines in a networked data storage system, comprising: monitoring usage of a virtual machine (VM) executing on one or more client computers in primary storage with computer hardware comprising one or more computer processors; in response to determining that the VM should be archived, copying the VM and its associated data from the primary storage to secondary storage; creating a VM placeholder for the VM in the primary storage; and deleting the VM and the associated data from the primary storage, wherein the VM placeholder appears to be the VM.