At its most basic, getting an Internet project up and running requires two essentials: access to hardware and access to Internet. Hardware and bandwidth are a major consideration in light of both potential expense and issue of quality of service. This is one of those areas where you can pay as much or as little as you like. There is a correlation between what you pay and quality you get, but there are plenty of good deals to be found in current market, so shop around.
Let’s take one step back and make sure everyone shares some common ground, in terms of terms.
"Servers" are hardware that holds and distributes information to people via Internet. A small site may reside on a server with a number of other sites, a large site may require hundreds of separate servers in a variety of physical locations, all connected together and running as one cohesive system.
Servers can handle a wide variety of functions, from housing websites, to running mailing systems. For a quick rundown of server terminology check out Webopedia server listing.
While some firms are interested in owning and feeding their own equipment, most firms these days choose to outsource all, or at least part, of task. Outside of firms with special needs, it is hard to make a case for purchasing hardware in current market. Like a new car, a server depreciates massively moment it is taken from dealer. Add to equation maintenance of hardware and software, and you have a cost center that not only becomes more expensive over time, but less functional relative to newest technology.
A web hosting company (sometimes called an "Internet Data Center" or "IDC") will offer a variety of packages, including rental of hardware. The low monthly costs associated with hosting these days tips hardware scale firmly toward decision to rent, rather than buy hardware. Let web host’s staff worry about changing disk drives, updating operating system with newest security patch and keeping electricity and Internet connection going 24 hours a day, 7 days a week. Outsourcing lets you focus on your core competencies, and fact is that most IT departments weaned on office networks are in no position to support a real time data center-type operation.
When we talk about outsourcing hosting, another term you are likely to hear frequently is “collocation”. Co-location facilities physically house hardware and equipment in a secure location. The facility generally offers some degree of security against physical intrusion, fire, and power or bandwidth interruption. The quality of physical facility and staff is generally related directly to price and a site visit is appropriate where high-reliability installations are required.