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Cheap VPS? Cheap VM? Cheap Cloud? What's the Difference?

QuestionsMany readers from the LowEnd community will see this headline and say “well of course, traditional VPS is ___ and cloud is ___ and it’s so obvious.”  However, our mission here at LowEndBox is to evangelize cheap hosting to newcomers who might be unfamiliar with some basics.  Thanks to Sean for a great informative read!  — raindog308

For whatever reason, Web Hosting Talk featured a post with a user asking about this difference. Many respondents suggest that there is no difference. They infer that the term “cloud” is marketing-speak. I felt this way for a long time as well, considering at the base-level hosting is hosting. Your infrastructure still resides in a building you likely don’t own. You are still running virtual machines on someone else’s hardware in many cases. You are still paying for a slice of a physical server; whatever the allocation may be. This is an oversimplification of a term to say the least.

Traditional Hosting

I won’t try and bore you with the minutiae of a “traditional” VPS hosting environment. The basics are a server, storage attached to that server, and management software. The management software is often SolusVM, which does a fine job at provisioning VPS. There are several types of virtualization available, most often you see OpenVZ or KVM.

Of course, variations upon this formula do exist. A provider can pre-compile templates that make installation easier. They can script application installs, updates, and configuration changes to make things easier. Hardware and network quality come into play, often times being what separates a good host from a bad. In the end, there is little perceivable difference between traditional VPS providers.

Cloud Hosting

Cloud hosting shares a lot of the same characteristics as traditional hosting. There are still physical servers, storage, networks, and management software. A physical server might host compute resources, or storage resources. Sometimes a physical server is part of a cluster that each node has both compute and storage. Such is the case with hyper-converged infrastructure; though more common in private clouds.

Cloud hosting still has management software. In some cases it’s OnApp, or Apache CloudStack, or OpenStack. OpenStack is an amalgamation of different software products, rather than a management system. The same as provision a VM on AWS, with OpenStack you pick what parts you want. Basics that you must have are Nova (compute), Keystone (authentication), and Neutron (Networking). Beyond that, the possibilities are wide and ranging.


The differences appear when you look into what makes a host “cloudy” as opposed to not. For example, creating and destroying VPS’ with hourly billing instead of monthly. Being able to scale up and down (API, CLI tools, etc) is a big part of being “Cloudy.” Traditional monthly billing of servers is not accommodating to this function.

Likewise, decentralized storage and the ability to live-migrate virtual machines are a cornerstone. Some clouds are hyper-converged, meaning storage and compute on the same node. Replicated storage is the difference here; data duplicated on many nodes. A more common scenario for a cloud environment is compute separate from storage.

This facilitates moving between compute hosts live, as well as providing fault tolerance. If your compute node fails, the system could move you to another one in the cluster. Likewise, if a storage node fails the other two or more will pick up the slack until replacement. Compare this to traditional, where if your compute node fails you better have a DR plan.

Networking is another point of discussion where the two methodologies diverge. A traditional VM host server might need a single public network connection. A cloud platform requires a more complicated network setup comprised of several VLANs. Segmented public, private, management, and storage traffic is essential to operation. Cloud platforms can provide VMs with segmented private networks, with clients VMs segregated. No longer must you run all your traffic in and out through your public connection.


This article is not meant to dissuade a person from traveling down one road or the other. While a Cloud system is more extensible, it is also more complicated. You can rent a dedicated server and have SolusVM installed and provisioning VPS’ in under an hour. With a cloud-platform like OpenStack, there is significantly more technical debt. To build a proper cluster you need nodes, networking, storage, and expertise. A common saying is that with OpenStack you either pay for a system like Canonical, or you pay for an Engineer to run it.

Sean Perryman

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