In order to appreciate the beauty of Virtual Dedicated Hosting, it helps to understand the alternatives - "shared" web hosting and “real” dedicated hosting.

Shared Hosting - Cheap But Potentially Unreliable

Shared web hosting makes it possible for hundreds or even thousands of users to host their sites very cost-effectively. However, there are a few drawbacks.

Because many web sites are hosted on the same physical server each site must share that server’s resources. These resources include bandwidth, disk space, memory, and CPU usage to name a few. The need to share resources is rarely a problem for small and medium size web sites.

The biggest limitation with shared hosting, therefore, is that you cannot control any of the system-level software such as mail servers, http servers, etc. You also are not able to choose your own operating system, compile programs, or perform other administrative activities such as installing firewalls and spam filters.

Real Dedicated Hosting

Real dedicated web hosting, on the other hand, solves all the problems with shared web hosting, but at a significant cost. With real dedicated hosting you have exclusive use of an entire server: all the memory, all the disk space, all the CPU horsepower.

Therefore, no other web sites’ problems, glitches, or whatever, will have any effect on your web site. You have total control over the server, its resources, and its administrative functions.

This is the ideal web hosting solution but it isn’t cheap. You have to pay for an entire server with no one else to share common expenses. So, typically, a “real” dedicated hosting plan will cost a minimum of $100 per month and goes up from there. And, unless you opt for managed hosting which is even more expensive, you have to do all the technical server administration yourself.

You run your business. I’ll run mine.

The fact is that most web site owners don’t need total control of their servers as they simply want to run their businesses. They have neither the interest nor the ability to perform all the technical tasks associated with a fully dedicated server and are more than happy to let their shared web hosting provider handle them.

However, when an online business begins to ramp up its transaction volumes, expand its product line to a large number of online offerings, or simply needs more control over its environment, there is a very cost effective alternative to a fully dedicated server.

Virtual dedicated hosting, also known as virtual dedicated server, or VDS, hosting, is the term for a physical server which, by means of software, has been partitioned into a number of virtual machines operating independently of each other as if they were standalone dedicated servers.

Virtual Dedicated Hosting - Advantages

The big advantage of VDS over a fully dedicated server is cost. Typically priced at less than one fourth the cost of full dedicated hosting, VDS hosting provides nearly all the same advantages. And compared to a shared web hosting plan, VDS is only slightly more expensive providing an excellent balance of economy and control.

With a VDS all physical resources such as memory, disk space, and the CPU continue to be shared, but each virtual server operates in a fully independent manner. For example, each VDS can run its own unique operating system and can be set up in any configuration imaginable.

The main advantage of a VDS is that each administrator maintains control at the root directory level of his or her own virtual server. Access at this level permits the web site owners to do a lot of neat things:

• Administer their own file directories
• Assign domain names that resolve to a primary domain
• without having to go through the web host
• Create and add e-mail accounts
• Assign email addresses
• Manage their own log files
• Maintain passwords
• Set permissions
• Delete and install software
• VDS administrators effectively have the ability to do whatever an administrator can do on a real, physical server.

Besides providing significantly greater control over the web hosting environment, the virtual dedicated server hosting is inherently more secure than any shared hosting server can be. Because web sites hosted on a shared server have to use the same operating system, a hacker who gets access to the server’s root directory could damage all the websites residing on that server.

On the other hand, a VDS is compartmentalized such that a hacker gaining entry via one account could in no way access any of the others. Each VDS is totally invisible to each other and it’s impossible to transfer root-level access capability from one account to another.

Virtual Dedicated Servers can be configured by the hosting company in a variety of ways so it’s important that you understand how your web host has allocated the server’s resources.

Typically the host would distribute the physical server resources evenly based on how many accounts and/or web sites are being hosted. Thus, with ten virtual servers on one physical server, each would be allocated ten percent of the storage, bandwidth, memory, and CPU time.

Virtual Dedicated Hosting - Disadvantages

Interestingly, the disadvantages of hosting on a VDS are pretty much the same as what the advantages are. If you’re not sure what you are doing, having the full control that virtual dedicated hosting allows can be very risky.

For example, you can accidentally delete files, or set permissions inappropriately, or allow viruses and other malware to enter the system and, overall, just make a real mess of things. So if you lack the technical skills to administer a web server, and are unable or unwilling to learn them, virtual dedicated hosting may not be a good choice for you.

However, if your site has reached a size where shared web hosting no longer accommodate the demands of your business, virtual dedicated hosting can provide a highly cost-effective alternative to “real” dedicated server hosting.

The Bottom Line

When selecting a virtual dedicated hosting plan, make it your business to understand how all the server resources are allocated, what the available options are for operating systems, how many VDS accounts will reside on each server, as well as the terms and conditions for upgrading and downgrading to a different plan.

Virtual dedicated hosting is the real deal when you need a robust yet economical home for your web site.

Anthony Hamill is the founder of Web-Host-Watch.Com which helps online business owners understand the basics of web hosting. There you'll find affordable web hosting plans, tutorials, tips on avoiding common mistakes, a glossary of web hosting terms, and a web hosting review that profiles the top hosts in each hosting category.