Dedicated Hosting refers to leasing out your own server at a hosting provider. This is most suitable for organizations who want complete control of their servers. In dedicated servers typically organizations not only host websites but also install additional software like source control (CVS, Subversion) and email services.

Typically a dedicated hosting provider makes available a barebones server which can be customized with different CPU, RAM and Hard Drive options. The usage is still restricted in terms of bandwidth and speed and depends on the plan you choose, but is typically much more than what is provided by shared hosting or even virtual dedicated hosting provider. Also, as the server is provided bare bones this requires an additionally administrative overhead in installing the required server on the software, monitoring site performance and other security overheads.

Dedicated Hosting again comes in two different forms:

1. Managed Dedicated Hosting.
2. Unmanaged Dedicated Hosting.

Unmanaged dedicated hosting is the most common form of dedicated hosting. The unmanaged refers to the different administrative functions which are required to be done on the server are not managed by your hosting provider. This works well for organizations which have the requisite skills/people in house to manage a standalone server.

Managed Dedicated hosting is a very recent offering and is a boon for organizations who either do not have the skills/people to manage a dedicated server, or for other reasons do not want to squander their scarce people resources on the job. In a managed dedicated hosting the hosting provider takes care of all the administrative functions of the server. This includes installing all software, monitoring site performance and uptimes and also performing all security overheads.

Costs:

Dedicated hosting is the most expensive hosting option and is typically used only by organizations.

Unmanaged dedicated hosting typically costs around $150/month for a Pentium Dual Core box with around 2GB of RAM, but cheaper options are also available for around $70/month for Celeron based boxes with 512 MB of RAM.

Managed dedicated hosting is obviously much expensive and often costs almost twice the rate of an equivalent unmanaged hosting option. Cheapest options start from $300/month onwards.

Advantages:

1. Freedom to install any software that you want. Most hosting providers will also install an operating system of your choice.
2. Complete control on the resource utilization of your server as no one else uses your box other than yourself.
3. Data can be as secure as you want it to be.

Disadvantages:

1. This is the most expensive hosting options and is typically only used by very high traffic websites and corporations.
2. Unmanaged hosting requires an additional burden to manage the server. Security specifically requires a great deal of work and an expert resource to get right and is also extremely critical.

Best Suited For:

1. Managed Hosting is best suited for big organization or cash rich startups who do not want to do the work in house and have high traffic websites.
2. Unmanaged Hosting is best suited for small startups short on cash or big organizations which have the administrative resource in house.

Some Dedicated Hosting Providers:

A good option for unmanaged dedicated hosting provider is Softlayer. They have competitive rates and good service. The author has experience in working with Softlayer and can vouch for pretty good service and uptimes.

A famous option of managed dedicated hosting is Rackspace. However Rackspace is slightly expensive and a single managed server might set you back by around $300-$400 per month. However, Rackspace also hosts a lot of famous high traffic websites so must be quite dependable.

A thing to note in choosing a good dedicated hosting provider is that good service reputation should always be chosen over a small difference in price. Maintaining a good service record and good uptimes is not an easy endeavor and only very companies are able to do it consistently.