Select Page

Physical Vs Virtual server : Which one should you choose?

Physical Vs Virtual server : Which one should you choose?

Gone are the days where people thought of “servers” as big, bulky machines installed in data centers. Now, “servers” more often mean cloud instances or VPSs.

All that being said, dedicated servers are still a favorite choice for many. Research shows that dedicated server market grows by $237 million each year [1]. So, the question is, what’s the better choice between virtual and physical servers?

Physical vs Virtual servers

Dedicated Server Hosting is still alive and thriving


As a company that provides Server Management Services, we are often asked what’s better – Virtual or Physical servers. We help digital marketers, web/app developers and other online businesses maintain their server infrastructure – and over time, we’ve learned that there’s no one-size-fit-all solution for all businesses.

See how our server support staff helps you!

There are several factors such as Security, Performance, High availability, and more, that determines which server infrastructure is ideal for a given business. Today, we’ll go through the top 7 factors, that we found as important.

1. Performance – Physical servers have the edge

Let’s get one thing clear first. If you take two dedicated servers of identical capabilities, virtualize one of them, and run the same application in both servers, the dedicated server will always show better performance. Why? Because virtualization always inflicts a performance penalty.

That being said, the difference in performance is noticeable only in applications that run thousands of transactions per minute (like busy eCommerce sites for example).

So, if performance improvement is your sole concern for a server upgrade, go ahead and choose a physical server.

But, before you make that move, know this – Most servers run at a snail’s pace because they’re not optimized. We’ve helped many customers avoid needless investment by tweaking their services, and implementing efficient resource usage.

How Bobcares helps avoid performance bottlenecks

We have a simple principle to keep a server super fast – Catch performance bottlenecks early and Nip it at the bud.

For this, we do 2 things:

  • Detect performance anomalies within minutes
  • Implement a permanent fix then and there
Quickly detect performance issues

For this, our experts keep a close eye on customer servers 24/7, and as soon as we detect an anomaly in performance metrics (such as server load), we login to the server, kill abusive processes, and prevent a server crash.

[ Making your servers stable and secure doesn’t have to be hard, or costly. Our Server Management specialists are here to keep your servers rock solid. ]

Permanently fix performance bottlenecks

We then go one step ahead and trace the source of the high load. It could be anything, like an un-optimized query, a fragmented database table, or an abusive connection. Once the source is identified, we optimize & harden the services then and there, so that a similar load spike won’t happen again.

By making these small incremental, and timely tweaks, we keep customer servers running very fast all the time, and more importantly, prevent a complete server failure later on, that could cost hundreds of dollars to fix, and more than that in lost sales.

2. Cost savings – It’s a volume game

The most popular reason to virtualize is to save money, and it holds true for a vast majority of cases – but there are exceptions.

Virtualization is beneficial only if you have a large number of servers, or if you’re using an open source virtualization solution such as oVirt. The software licensing costs can be too heavy for smaller installations.

Let’s explore this point with a 5 server infrastructure, as shown here.

physical vs virtual server

A mid-size business infrastructure with load-balanced web and database services.

Now, let’s see what the cost would be to implement this infrastructure using dedicated servers, public cloud and a server virtualization software.


Dedicated servers Vs Public cloud

A 5-server infrastructure as the one shown above is typically used for large websites that attracts thousands of hits per hour. For the sake of calculation, let’s say such a website attracts 7000 hits/hour.

[ Do not waste your money over unnecessary server upgrades. Click here to maintain your servers lightning fast with our 24/7 expert intervention.]

Cost of dedicated server infrastructure

To implement this system, we’ll need 5 dedicated servers. The standard cost of dedicated servers is $140/server/mo, which includes bandwidth cost and software license costs. That takes the cost to $8400/year.

Cost of public cloud infrastructure

If we were to use a public cloud solution like AWS, the per server cost would be $110/month (including the bandwidth and data costs of 7000 hits/hour). This translates to $6600/year. That’s a saving of $1800/year.

But, if the traffic and data usage grows to double the site (which could happen to a growing company), the costs could easily touch $10,000/year or more.

So, while the public cloud solution could work in the short term, it might get costlier in the long run.


Virtualized servers Vs Dedicated servers

We’ve seen in the earlier example that setting up a 5-server infrastructure using dedicated servers will cost $8400/year. Now, let’s see compare it with the cost of implementing a virtualization software.

Virtualizing dedicated servers

To implement a 5-server infrastructure using a virtualization solution, we’ll only need 2 powerful physical servers, as shown below:

virtualized infrastructure

The 5-server infrastructure could be consolidated into 2 higher capacity servers with a virtualization system.


High-end servers can cost $170/server/mo. So, the yearly costs could be $4080 for hardware and application licenses. A commercial virtualization solution (like VMWare) for 2 servers could have a one time cost of $9300, and a recurring cost of $1900/year.

So, if a virutalization solution is used, there’s a one time cost of $9300, and a recurring cost of $6000/year. That means, a virtualized infrastructure can give a savings of $2400/year when compared to a dedicated server solution.

The flip side is that, many businesses will find the huge upfront cost of $9300 (almost double the annual cost) a bit too steep for a relative savings of 28%.

[ Are your servers configured for maximum efficiency? Click here to keep your servers lean and mean, by our specialist engineers who’d manage them real-time. ]

Virtualization is profitable for large number of servers
Now, virtualization could save money if it can replace close to 10 physical servers. For eg., if the number of servers in the original infrastructure was 10, the annual dedicated server costs would be $16800 ($140 x 10).

With virtualization, the costs could be limited to $6700/year, reducing the costs to almost half (including virtualization costs). Almost similar calculations work out for co-located servers or on-premises servers.

So, implementing server virtualization on your current infrastructure gives you a cost benefit only if you have a large number of servers or if you choose an open source virtualization technology such as oVirt to offset the licensing costs.

Here’s a quick comparison of costs for the different infrastructure:

Dedicated ServersPublic CloudVirtualization on
Dedicated Servers
Cost per Year$8400$6600$6000
One time cost$9300
Savings (compared to
Ded servers)


Are you a server owner?

Get full spectrum infrastructure management services - setup, monitoring & maintenance.

Never again face a critical business downtime. We keep your servers secured, optimized and updated 24/7.



  1. Thank you Sajan, Great explanation.

  2. Excellent post!! in order to understand the advantages between virtualized and physical environment.

    • Thank you Edwin. 🙂

  3. Hello Admin,

    I wanna start own web hosting company like Godaddy, bluehost and Hostgetor, suggest which kind of physical or Virtual Server I need to have and what server configuration should have? which company is best for server installation like Dell, HP, IBM, Sun, and Oracle? plz also suggest me how much server space should have in the beginning?

    • Thanks for visiting our site Bhoopendra. The choice of server and technology depends a lot on how you plan to build your business. How about we talk this over mail?

      • Hi Blessen,

        thanks to reply me, you can reach me through my email bhoopendragauta(at)gmail . com .

  4. In the comparation used by you 5 physical servers are compared with one server that will hold 5 virtual servers? In this case, when you said about the hardware failure “Despite the best precautions, catastrophic server failures do happen due to electrical issues, hardware failures, fire, etc. In dedicated servers, disaster recovery in such instances involve a long-winded process of setting up new servers..” what will happen if this failure will occur to the physical server that is hosting the virtual machines?

  5. Please add a section on software licensing. dB licensing costs play a critical role especially when considering server consolidation.


Submit a Comment

Your email address will not be published. Required fields are marked *

Bobcares is a server management company that helps businesses deliver uninterrupted and secure online services. Our engineers manage close to 51,500 servers that include virtualized servers, cloud infrastructure, physical server clusters, and more.