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Its the very reason you dont go for hosting - you go for co-location, you put your own hardware in the the POP (Point of Presence) on the internet - if you go for hosting then you will be one of many on the same cluster typically.
What a load of codswallop.
Oh sorry I do apologise to your much superior knowledge and bow down to your feet - I only work in the industry so I know nothing of course.
Now lets try get some things clear here.
1. Hosting
This is where your website is "hosted" on a web server along side others and is the cheaper option as the cost of the hardware, maintenance and upkeep is spread amongst the hosts for the "hoster" to be able to make money. This hardware is maintained by the hoster with a service level agreement and typically nowadays is virtualised across a number of servers with resources restricted by the virtulisation software (typically VMWare)
2. Dedicated Server
This is where by the company that provides hosting facilities provides a dedicated server(s) for the web site in question - whilst this is better than hosting in that there is dedicated equipment and resources there is the limitation that the servers fall within the configurations provided by the company in question. Typically there will be no virtualisation or sharing of resources it will be a standard build that is maintained by the company in question.
3 Co-Location
This is where you purchase the equipment, set it up how you wish and co-locate that equipment within the racks of the communication provider of your choice. Typically the co-location provider will have 24/7 online support for you to request re-boots etc of hardware. This equipment and its configuration is under your control so can be as flexible as required, i.e. it can be a single 1U box or your own server farm - whichever is most suitable for the situation.
Yes there's hosting that's like a battered old flying school Cessna ..... but there's also hosting that's like a Boeing or Airbus with all the redundant systems etc.
I neither fly an airbus/boeing or a cessna, I write software for a living - so that analogy is a bit lost on me. I will refer you to the above as to how "hosting" a web service is sold and you can fit your analogy around that if so suits.
So now we have established some facts - which part exactly is codswallop in what I said??????
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Bushfiva:-
Virtulisation does work very well in the respects you say and I wont dispute that - it is something we use extensively. The ability for a failed virtual cluster to be re-started on a new server cluster in minutes is an invaluable tool for hosting a service. However my point remains that if you are hosting many busy services on the same cluster then your resources are limited/shared and that dedicating those resources is a way to improve your service.