Virtual Private Servers are essentially dedicated servers inside another dedicated server. In this configuration companies take a dedicated server with say 8GB of RAM and use tools from VMWare or Oracle to create virtual machines. Each virtual machine takes some of the 8GB of RAM and can be used just like a dedicated server. Virtual Private Servers still suffer from some of the same problems as Shared hosting. While each VPS gets a dedicated amount of RAM and disk space, your neighbors might be maxing out their VPS which may cause problems for you.
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