A web server running your website is something which every website owner wants to have. It means that the traffic to his site has reached levels where a shared hosting will no longer fit his requirements. It also means that his website now needs to have the resources of a single machine, or at least several servers.
Outgrowing Shared Hosting
Most startup websites start with a shared hosting package. This is where multiple instances of a web server software are running on a single server. Since there is only a small volume of traffic, the computer can easily serve multiple web pages. When the website starts gathering traffic, it would exceed the limitations of the shared hosting package, and it would be time to think of upgrading.
One option for upgrading is a virtual server package. Another option is that of shared co-location.
Virtual Private Servers vs. Server Co-location
Virtual private servers are very popular alternatives nowadays for web hosting. One physical machine divides its processors, RAM and secondary storage between several virtual servers. However, there is one limitation to a virtual server: it still shares resources with the mother or host server. In effect, the virtual server can only be as powerful as the number of processors and memory allotted to it.
If your application, service or website requires 8 processors and so many gigabytes of RAM, then it should be running on its own server. In fact, if you really have heavy traffic, it would be better to have multiple computers, each of them powerful in their own right, clustered together. This would mean that the resources and jobs required would be spread out over the servers in the whole system.
Flexibility of Use
When you have a server co-location service, you own the computer or computers. You can install virtual servers, multiple web service instances, or you can even have a dedicated backup machine. Additionally, when your website continues to grow, you can upgrade by buying more servers, and in migrating your website, data or services to the new ones, and have background processes relegated to the older machines.
The use of co-location services allows the owner a lot of possibilities, not just faster response time when serving web pages. It does require some imagination to make use of multiple machines in a running a website.