Virtual Private Server Hosting or VPS Hosting is essentially a dedicated server within a shared hosting environment. With VPS Hosting, each customer can run their own virtualized operating system within a partition of a dedicated server. Even though multiple customers are on the same physical machine, VPS Hosting allows each customer's account/website to have all the capabilities of being on their own separate machine. This type of hosting offers advanced performance and flexibility with the ability to customize at an affordable price.
koding.com has a free VM running Ubuntu. The specs are pretty good, 1 gig memory for example. They have a terminal online you can access through their website, or use SSH. The VM will go to sleep approximately 20 minutes after you log out. The reason is to discourage users from running live production code on the VM. The VM resides behind a proxy. Running web servers that only speak HTTP (port 80) should work just fine, but I think you'll get into a lot of trouble whenever you want to work directly with other ports. Many mind-like alternatives offer similar setups. Good luck!
With unmanaged VPS hosting, the cost is also much cheaper. It is not uncommon to find $10 unmanaged VPS plans because the web host does not have to pay for a cPanel or Plesk license and are able to minimize costs. Also, since the web host does not provide software and account support for an unmanaged VPS, the host also saves money on customer support. In the end, you'll have VPS hosting that is typically $20-30 cheaper than a managed VPS solution.
A VPS runs its own copy of an operating system (OS), and customers may have superuser-level access to that operating system instance, so they can install almost any software that runs on that OS. For many purposes they are functionally equivalent to a dedicated physical server, and being software-defined, are able to be much more easily created and configured. They are priced much lower than an equivalent physical server. However, as they share the underlying physical hardware with other VPSes, performance may be lower, depending on the workload of any other executing virtual machines.[1]
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