The concept of a virtual private server can be better explained as a virtual machine that caters to the individual needs of a user just as a separate physical computer that is dedicated to a particular user. The virtual dedicated server provides the same functionality and privacy as that of a normal physical computer. A number of virtual private servers can be installed on a single physical server with each one running its own operating system.
Amazon EC2 is a web service that provides secure, resizable compute capacity in the cloud. It is designed to make web-scale cloud computing easier for developers. You can use Amazon EC2 for a variety of applications, including websites and web applications, development and test environments, and even back-up and recovery scenarios. Amazon EC2 offers a wide selection of instance types with varying combinations of CPU, memory, storage, and networking capacity that you can use to meet the unique needs of your applications.
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Another benefit of virtualizing servers is that they are no longer tied to a hardware platform. This provides the ability to virtually expand or upgrade (upgrade) the hardware platform during operation without significant downtime (~ 1 second downtime). Also, a hardware problem does not result in longer downtime (assuming existing spare capacity) because the VPS can be restarted quickly on a different hardware.
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So that could be either a virtual machine - an operating system running inside another operating system, or a virtual private server - you rent a virtual server from a company, so you have your own internet-facing server running 24/7 relatively cheap (since it's not a real server, but one of many virtual server running on an actual server). I think he might have meant the later, since you'd have to run a snartnofe (btw I love that name) non stop to benefit from it.
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.