1. A method of archiving virtual machines in a networked data storage system, comprising: determining whether to archive a virtual machine (VM) executing on one or more client computers in primary storage with computer hardware comprising one or more computer processors based on usage data; 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 wherein the VM placeholder appears to be the VM; deleting the VM and the associated data from the primary storage; and restoring at least a portion of the VM and the associated data to the primary storage when the VM placeholder is accessed after the VM and the associated data are deleted.