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For 32-bit processes running on a 32-bit machine, the upper limit of the private portion of the process address space is 2 GB. Using the /3 GB Boot.ini switch, 32-bit processes can acquire up to 3 GB of virtual memory. A 32-bit process that is running on a 64-bit machine can acquire up to 4 GB of private virtual memory.
The big question that's left is: why can't the JVM not use more of my computers memory? My PC is running WinXP Pro 32 bit with 3 GB RAM. I know that the amount of memory a process can use is restricted in a 32 bit environment, but that limit should be at least 2 GB: