A Virtual Private Server (VPS) is an isolated server that shares the hardware of a single physical server. This is achieved by a process called Virtualization - dividing the physical server into logically separate virtual machines (VM). Each VM has its own operating system (commonly Linux or Windows), and has a dedicated allocation of resources. The only shared resource is the storage disk, which is offset by running an efficient high-speed Storage Area Network. A VPS can be rebooted independently, has its own root access, IP addresses, users, memory, processes, ports, etc.
A VPS is a Virtual Machine (VM). The terms VPS and VM are often used interchangeably, but this is a bit misleading. The core difference is that the VPS is a purchasable product, and the VM is a type of technology. So a VM does not necessarily need to run a VPS, although it is one of the most common commercial uses.
The appeal is that even though multiple VPS will run on the same hardware, the reliability and speed of a VPS is akin to a dedicated server due to modern technology allowing direct hardware level access. In fact, from a deployment and remote access perspective, many users will find them to be equivalent for their purposes. Dedicated servers still remain indispensable for clients that require full control over an entire box.
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