How does dedicated server hosting work? [+ comparison with shared hosting]

How does dedicated server hosting work?

Deciding whether to opt for shared or dedicated server hosting is one of the most important decisions you’ll make when it comes to choosing infrastructure. To ensure you make the right decision for you, it’s important to first understand how hosting works and the key differentiators between dedicated server vs shared hosting.

For many, the draw of shared hosting lies in its perceived affordability and convenience. But all too often these ‘perks’ come at a cost in the form of hidden expenses that make managing overheads challenging.  

In this blog post we’ll get to the bottom of how hosting works and equip you with the information you need to choose between the various server hosting options. We’ll unpack the differences between shared and dedicated hosting and answer some common questions about dedicated server hosting.

But first, let’s lay some foundations and understand the differences between shared hosting models and dedicated server hosting. Starting with shared hosting.

What is shared hosting?

Hosting companies using a shared hosting model divide whole servers and their resources into portions. It’s like slicing up a pizza so that multiple people can enjoy a piece of the pie. In the same way, shared hosting allows multiple businesses to share in a ‘slice’ or ‘slices’ of a server. Today this process is often referred to as web hosting. 

Following the dot com boom, shared hosting was a much-welcomed development. As more websites were created there came a requirement for more affordable hosting. Instead of investing in an entire server, shared hosting gave smaller companies the opportunity to rent out the exact amount of server resources they needed.

When we talk about shared hosting, we’re typically referring to one of three shared server hosting options: shared hosting (the easiest one to remember, as it helpfully has the same name as the type of hosting), virtual private cloud (VPC), and public cloud.

1. Shared hosting

Shared hosting makes it possible for multiple customers (or websites) to use a single server. Under a shared hosting model, the hosting provider creates separate user accounts on one physical machine. Each customer is assigned a set amount of server resources. And whilst this is usually sufficient for low bandwidth users, it can quickly start to crack under the pressure of high-volume traffic applications.

The biggest draw of shared hosting is the price. Shared environments are reasonably cheap and easy to set up. However, there are some notable drawbacks that cannot be ignored. Shared hosting accounts are not logically isolated from one another meaning that accounts are more vulnerable to security issues, and the possibility of your website or application slowing down if other tenants are overusing server resources.

2. Public cloud hosting

Public cloud servers use a hypervisor to divide and deliver server resources to multiple customers. Public cloud customers aren’t buying the rights to use a whole, or even part, of a physical server. Instead, they buy access to virtual machines – digitized software versions of a physical server that execute computing functions and run operating systems.

These virtual machines are spun up on a physical server or cluster of servers. The hypervisor manages the underlying shared resources and allocates them to each virtual machine. Scaling is practically instantaneous. Simply add another virtual machine and that’s that.

3. Virtual private cloud hosting

The virtual private cloud also uses a process of virtualization. In this case the hypervisor splits the server into multiple virtual machines that behave as independent accounts on the physical server. VPC creates a private computing environment on a shared public cloud infrastructure. Each virtual machine is logically isolated from all other tenants and cannot interact with any other virtual machines on the server.

That means server resources are allocated to their virtual machine in complete isolation from other VPC customers. As a result, VPC customers can separate their hosting environments from other users and customize their virtual machine, even though they’re sitting on the same physical server as multiple other virtual private cloud customers.

Much like public cloud hosting, virtual private cloud can be scaled instantly but it has the added benefit of augmented security since it sits in a logically isolated network.

With all shared server hosting options, even logically isolated networks, you’re still sharing a server with multiple customers. And this opens you up to the potential performance issues and security mishaps associated with multi-tenant server hosting options.

What is dedicated server hosting?

A dedicated server means a server in a data center that is dedicated to a sole user (a single tenant). In other words, dedicated servers host individual customers. A dedicated server host will never let more than one business run its application on a single server.

And that means there’s no cause for virtualization or setting up multiple user accounts on the server. Dedicated hosting providers spin up bare metal servers for individual customers who have complete administrative access over their machine. The server resources (RAM, disk space, CPU, and bandwidth) are solely for the use of the designated tenant.

Dedicated servers come in various standardized dimensions (or ‘form factors’) measured in units (U). Smaller servers (1U servers) take up less space and are less powerful. Larger servers (2U+ servers) take up more space and are more powerful.

Shared hosting vs dedicated server hosting

shared hosting vs dedicated hosting


Shared hosting

Dedicated server hosting

Resource allocation

Shared amongst multiple users on one physical machine either directly or as a virtual machine.

Servers are single-tenant meaning resources are dedicated to one user.


Limited customization options.

Fully customizable.


Highly scalable. Additional resource can be spun up instantly.

Additional servers can be spun up in a matter of minutes. Customers can also easily scale down.


Reliant on the other tenants to ensure good security practices. If they are hacked, your business could be vulnerable.

Separate from other tenants meaning a company’s server resources are accessible only to them, offering better security.


Very affordable. Rent the exact amount of server resources you need.

Affordable. Rent on a month-to-month basis and remove the need for high CAPEX costs.

Uptime and reliability

Because resource is shared, you are not guaranteed access to all the resource you need at any one time. Your website or application could slow down if other tenants are overusing server resources.

High levels of server uptime and reliability as resources aren’t shared with others.

Who needs dedicated server hosting?

Well, if a business’ resource requirements are any larger than a typical small server can accommodate, then any kind of shared hosting is unlikely to meet its needs. In most cases, the business will need to move to dedicated hosting. 

That’s because for resource intensive, latency-sensitive workloads, a ‘slice’ of the server pie is insufficient. Having sole root access to a server with dedicated hosting gives businesses more compute power, eliminates shared bandwidth, and increases scope for customization.

And because dedicated servers are physically separated from other tenants, they also offer additional security.

Dedicated hosting or infrastructure as a service is considered a top-tier service and an upgrade from shared hosting, owing to several noteworthy benefits, including:

  • More robust and customizable system architecture

  • Higher levels of server uptime

  • Improved latency and round-trip times (RTTs)

  • Faster response rates and loading speeds

  • Increased application resiliency

  • Greater flexibility to scale (up/down and out)

  • Tighter security and data privacy

Because of these benefits, switching to dedicated server hosting can increase the stability, reliability, and performance of applications, as well as help companies reduce infrastructure cost and scale easily.

How does dedicated server hosting work?

How hosting works in a dedicated environment is quite different from how hosting works in a shared environment. The best dedicated hosting providers will let you choose between various dedicated server hosting configurations, so you can self-manage upgrades and handle processor-demanding I/O-intensive workloads.

Some specifications within dedicated hosting environments will be fixed. The chassis provider (Dell, HP, Supermicro, etc.) and CPU (Intel, AMD etc.) are usually chosen by the vendor. As is network capacity (typically 1G or 10G). But RAM and disk should be upgradable up to the maximum capacity of the server.

You’ll also have options for managed and unmanaged dedicated server hosting, which offer varying levels of server management, administration, maintenance, and support. Your dedicated server hosting provider will also take care of several backend processes, such as:

  • Data center space, power, and cooling

  • Data center support staff and network engineers

  • Purchasing and maintenance of servers and network equipment

Some dedicated hosting providers may also take care of:

  • Purchasing OS licenses, alongside installing/upgrading them

  • Fixing server firmware issues and sometimes DDoS protection

They then factor these costs into the monthly fee charged to their customers.

Even though each physical server is dedicated to a single customer, there are some elements of the overall infrastructure that are shared. Data center networking equipment (switches, routers, and Internet Service Provider (ISP) internet connectivity) are usually shared between all customers renting servers within the provider’s network.

How to host a dedicated server is variable. But to optimize performance, a good dedicated server host will partner with data centers that have a high number of quality carriers, clouds, and IXPs available from within their facilities to connect your network to.

But is dedicated server hosting scalable?

The short answer is yes. For dedicated hosting providers, facilitating scalability is an essential consideration. Scalability must be factored in to how to host a dedicated server to offer businesses a sustainable infrastructure solution.

But an assumption that dedicated servers cannot be scaled adequately is what keeps many businesses from switching to dedicated server hosting – even if it’s the best choice.

Although dedicated servers can’t match the instantaneous scalability of cloud, where virtual machines can be spun up and down in line with rapidly shifting usage curves, bare metal scalability has come a long way in recent years.

Today, an integral part of how to host a dedicated server well is to offer the best of both worlds - the strength of dedicated hosting with cloud-like scalability and the ability to run up more servers as and when demand calls for it.

It’s all yours

Understanding how hosting works and how dedicated server hosting compares to other server hosting options, is critical to making an informed decision about your infrastructure.

Dedicated hosting providers offer infrastructure solutions with increased application resiliency and performance, heightened security, and the freedom to customize your system architecture.

For resource-demanding applications it’s a no brainer. Dedicated server hosting providers offer the best foundation to ensure the right balance between reliable performance, control, and scalability.

Last Updated: 27 October 2023

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