For most people the price of the hosting package is the most important, in that they want it to be as cheap as possible. People are quite happy to pay £20 per year for a basic package that provides them with a few GB of space and bandwidth. An unfortunate aspect of buying hosting on the cheap, is that there may be many aspects of the hosting that aren't that great. Things like technical support and reliability may be quite poor. This kind of hosting is not suitable for individuals with large websites that service thousands of visitors every day or online businesses that need near 100% up-time. For those kinds of application, a dedicated server or "dedi" is the most suitable option.
To an experienced webmaster or FTP user, the advantages a dedicated server has over the most common hosting package, that being shared hosting, are quite clear. Dedicated servers are significantly faster, allowing your website to service your visitors quickly, without being slowed down by someone else's site that may well be hogging the shared server you are on. You are also free of the restrictions that apply to shared hosting. Such restrictions include but aren't limited too: Running PHP scripts for long periods, excessive CPU or memory usage and the ability to have as many sub-sites as you want. Another advantage specifically for promotion purposes, is the fact that a dedicated server is guaranteed to have its own unique IP address. A known issue with sharing an IP address with another website is that if they were to do something that were to be frowned upon by search engines, your site may be penalized too.
Despite all these advantages, as far as the user is concerned the biggest draw back to a dedicated server is the cost. Most dedicated server solutions cost in excess of £100 per month (not year!). These high costs aren't a problem for major businesses that need and utilize the power a dedicated server has to offer, and in some cases businesses buy and setup there own dedicated servers on-site. Obviously for most people at home, this option is far too expensive!
When an individual or small business has a big, power hungry idea they want to implement, virtualised dedicated servers offer a solution that is cheaper than a "traditional" dedicated server, but has the muscle to deliver similar results.
For FTP storage providers, virtual dedicated servers offer a way to quickly and easily upgrade someone else's account. If a user requires more space, it is simply a matter of changing some settings on the server to fulfill the request. You couldn't do this with a physical dedicated server, as in most cases you would have to replace or add a new drive into the server and copy over the user's files. Such a process is awkward and time consuming for a business that may handle many such requests.
Virtualised servers also take up less space in the building. A large server can be powered by a single PSU (power supply unit), be crammed full of hard disks, CPUs and memory. The whole resource pool can then be partitioned as much as is needed for the user accounts. In order to do this, virtualisation software must be installed on the server. This allows the entire system to be split into as many "miniature" systems as desired, each with their own operating system. This is the heart of the virtual server; examples of virtualisation software are Xen, HyperVM, Virtuozzo, OpenVZ and Vserver.
At the end of the day, a server that is created to run just one website is slightly better than a virtualised one. The major difference as mentioned before, is the cost but the performance to cost ratio is far better. So when you find your website or e-business getting too cumbersome for your shared hosting account, upgrade to a virtualised server and reap the same benefits a dedicated server has to offer without the hefty price tag!
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