A dedicated server, in the traditional sense, is a computer on a network that serves a “dedicated” purpose, usually to coordinate a single process. Corporate local networks, for instance, use dedicated servers for emails, databases or printing devices.
In the web hosting industry, a dedicated server is a computer in a data center that is leased to you, as a customer. You get full control over it remotely, via ssh or a remote administration panel, and rent it together with an operating system and a set of applications.
When to Go for Dedicated Servers – When it’s Right for You?
Given the price range of dedicated servers, we can safely assume that they aren’t for everybody. If you own a personal blog with several hundred unique visitors per month it wouldn’t make sense to spend $300 on a powerful machine – your site can easily run on a shared hosting account. Who are dedicated servers for then?
Traffic-intensive websites:
Once you receive upwards of 10,000 unique hits a day you will find that the CPU power of a shared account will bog down the overall performance of your site. You will get slow response times, server errors and you will soon lose your visitors.
Custom or resource intensive applications:
Applications that need specialized software and/or consume heavy resources are to be hosted on dedicated servers. Video and audio streams, for instance, cannot be run from shared hosting accounts, since you will need custom applications and these will be eating up lots of bandwidth, RAM and CPU power.
Fully managed, managed, self-managed and unmanaged dedicated servers
With a fully managed service, your web hosting company will take care of most of your day to 
day administration tasks. You are only in charge of setting up domains and email addresses, uploading your websites and … making money! Fully managed services are more expensive than the rest of the packages, but most webmasters find that the extra price is well worth the money spent – getting a fully managed dedicated server will help you sleep better at night knowing that there is someone to watch for your server and take actions when something goes wrong.
Managed dedicated servers come with medium level of management from the web hosting company. You, as a customer, will be required to perform some tasks as well. If you have some technical skills and can afford to spend a few hours per month doing some grunt work then you may find such a package quite competitively priced.
Self-managed dedicated servers only come with some basic support and management. The host will do intrusion detection tests every once in a while and might upgrade some software for you. Further assistance will be billed to you at some hefty hourly rates.
With an unmanaged dedicated server, you receive the box with the operating system you have ordered and, eventually, a web server, SQL database and mail system, which is the most common configuration. Afterwards, you are on your own. You will be in charge of configuring your system to match your needs, set up and manage the firewall rules, keep your system up to date, monitor logs and take actions accordingly. The web hosting company will only assist you if something serious occurs, like hackers prying into your database or you getting locked out of your server.
Dedicated servers versus in-house hosting
You could, technically, run your web application from a server physically connected to your company network. Costs will apparently be much lower – you would only need to pay for the bandwidth and the hardware, which is an one-time expense rather than a monthly fee,
However, there is much more to hosting a corporate website than a computer with a good uplink:
You will need dedicated administration personnel
The cost of hiring a specialized engineer to take care of one server is going to be quite high, at least a lot higher than what a dedicated managed server is going to cost.
Hosting environment
Web hosting companies invest lots of money in redundant Internet connections, temperature control systems and backup power lines. If the power goes off for ten minutes in your office building you could probably keep your server online with a $300 UPS device, but what if the failure is a major one and the power is gone for a few hours? Also, what happens if your ISP g
oes down for a whole hour? Web hosting companies will instantly switch your server to an alternative connection if the main one fails. Can you do that with a computer in your building?
Security
No firewall in the world can keep away a malevolent employee with physical access to the server. You will have to invest more in security features!
Limitations
Contrary to popular belief, there are some limitations as to what you may host on a dedicated server.
- IRC isn’t allowed by most mainstream providers these days. If you want to host an IRC server or even run your own clients and bots, you will have to do a bit of research to find a web hosting company that allows it. This is mainly due to the fact that IRC servers and clients are prone to being hit by denial of service attacks, and most providers don’t want to take such chances.
- Hosting adult content is also tricky. Many web hosting providers don’t allow it altogether, while others may ask for further proof that the content you are going to offer is legal – i.e. models are of legal age and you own copyright over the distributed materials.
- Material that infringes copyright laws is a major no-no. With the recent SOPA/ACTA/PIPA hype, no company will risk having their service taken down for the sake of some customers who believe they have found ways to bend the law. If you are going to share copyrighted material then you will be taken down without even a prior notice.