VPS has clear advantages for website hosting as it offers a huge level of flexibility over shared website hosting, without stretching your budget to a dedicated server. A VPS offers you an environment for development and testing for your website hosting. For example, you could choose to have a VPS dedicated to testing and a separate VPS running simultaneously for your live or production websites. Without the need for two physical servers you can safely debug software, install major changes and software updates in a secure environment without affecting your live websites. You can also use a VPS for back-up or file storage. It's easy to switch between virtual servers so you can protect and maintain website visibility online even while undergoing extensive development work.

To break things down a bit, cloud VPS (Virtual Private Server) hosting is when a web hosting provider takes one massive server and partitions it up so that it can have several servers on it, each of which can run its own operating system and can be re-booted independently.  Sounds simple enough.  So what is the difference between managed VPS and unmanaged VPS?
OpenVZ virtualization is an OS level container-based virtualization, and it has resources that are divided between users on a physical server. Each container acts like a stand-alone virtual server and can be accessed with a root (SSH) connection. As a separate server container can be rebooted separately, it also has a dedicated IP address, shared RAM, individual processes, files, applications, system libraries and configuration files. On OpenVZ, the kernel cannot be modified. It has its stable version and modules cannot be added. The good thing regarding this virtualization is a faster performance, and a lower need of resources.
The force driving server virtualization is similar to that which led to the development of time-sharing and multiprogramming in the past. Although the resources are still shared, as under the time-sharing model, virtualization provides a higher level of security, dependent on the type of virtualization used, as the individual virtual servers are mostly isolated from each other and may run their own full-fledged operating system which can be independently rebooted as a virtual instance.
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