Most websites use shared hosting - that is the hosting company hosts a number of sites on the same server. This allows them to offer low cost hosting by sharing the cost among many customers.

For most people, this is fine, but there are some circumstances where you might not want to have shared hosting. With normal shared hosting you get:

• Shared IP address
  All websites on a shared hosting account share the same IP address. This could cause problems if another customer is unscrupulous and is caught spamming. The IP address could get blacklisted, preventing your legitimate emails and marketing messages from getting through.
• Shared resources
  If another website on your shared hosting account uses a lot of the servers resources, this could slow down your website significantly, or perhaps they are running an insecure application that causes the server to crash, or get hacked.
• Limited Applications
  You may want to run a game server, or a news server, or you may want to use an application that the hosting company does not provide.

One answer could be to have your own dedicated server , either managed or co-located, however, this can be an expensive option. 

Virtual Dedicated Server

This is where a Virtual Dedicated Server (also known as a Virtual Private Server or just plain Virtual Server) comes in. The hosting company can partition a single physical server into several entirely independant virtual servers, bringing the costs down significantly.

Each VDS is completely seperate from the other ones on the same physical server - they can be stopped and started independently, and have different software running. They run in their own protected partition, operating as though they are independent servers.

With a VDS you get you own IP address, so you cannot be adversly affected by another website sharing your IP address.

You get root access to your server, allowing you to install any applications you require, such as different databases, mail servers etc. Virtual dedicated servers are also ideal if you want to host multiple domains on your server - no need to buy additional hosting when want to set up another website.

You get the added security and peace of mind from knowing that no-one can access your "section" of the server, nor can someone elses mistakes lead to yor server being unavailable.

If you are running an e-commerce site and need to keep your information confidential, or want to run a game server, IRC server, or want to run multiple websites, a virtual dedicated server could be the ideal solution for you.

Like shared hosting, virtual dedicated servers usually come in a range of size/bandwidth options. The lowest priced ones tend to be set up to host just one domain - ideal if you have a single ecommerce site and want the peace of mind that comes with your own server. Higher priced packages are set up to host multiple domains.

Of course, there is a downside to this - you are solely responsible for the maintenance, updates and security of your VDS - you will need to learn some basic administration tasks if you don't already know how.

But this is not beyond the scope of anybody who is considering a virtual dedicated server, and help files and support are always available.

UK Virtual Dedicated Servers

Uk Hosting companies seem to have realised that they were losing customers to US companies, and are now starting to offer better packages in order to compete.

eUKHost gives you the features and functionality of a dedicated server without the cost - vps packages start at only £19/month (linux 10Gb) or £24/month (windows 7Gb). More Information >

Hostway Virtual Private Servers for resellers, gamers & developers. Dedicated Performance & Security at an affordable cost- Root VPS from £39.95/month , Plesk VPS from £49.95/month. More Information >

Lycos VDS Install your own applications like a news server, Irc server, game server or web server using all the advanced techniques you need. Prices starting at £6.99/month

US Virtual Dedicated Servers

GoDaddy.com Virtual Dedicated Hosting - where virtual dedicated servers start at just $27.96 / month

midPhase Hosting midPhase has invested a considerable amount of time and money into developing an ideal hosting platform for both small businesses and individuals. From launching our clean, simple and easy to use Web Mail and Control Panel version, to offering high allowances for disk space and monthly data transfer, midPhase is confident that our service can meet the needs of a very wide range of customers.

Dont forget - if you are in the UK, you can take advantage of the US Dollar exchange rate to get a great deal on Virtual Dedicated Servers

GoDaddy.com Virtual Dedicated Hosting - where virtual dedicated servers start at just $27.96 / month - thats just about £16/month (depending on exchange rate)