We've been on dedicated servers for a long time, and we're at a point where cost-efficiency and flexibility are our two biggest factors.
We're expecting pretty linear growth, so scaling isn't a huge deal. Up until now we would regularly switch to a better server, stay there until we outgrew it, and then jump again. It's kept us relatively lean/current and our costs have stayed low as the cost/quality of hosting has changed (and we've gotten better at sniffing out good hosts).
Places like linode and slicehost would have been decent options in the past, but we serve 1-2 TB of data each month, so we like to have lots of bandwidth available. And while many dedicated servers offer that, our server admin is pretty picky about the hardware, so she'd like to be able to manage it on her own.
Out of curiosity, how easy is it to 'hook up' two separate Xen instances, assuming Xen is what slicehost and Linode run on? I'm not a server guy, but I actually share a slicehost plan (separate from this particular venture) with one of our fellow News.YC hackers, so I'm familiar with how excellent the company/service is. If they're really that easy to connect/scale then it might be worth the extra cost...
There's a story about a site named FaceStat that was linked on the front page of Yahoo! one day, and had to spin up several Slicehost slices, complete with load balancing and all (or most) of the trimmings. Unfortunately, the admin's site is suspended by bluehost (or someone), and I don't remember the details. Here's a post by Slicehost that is related: http://www.slicehost.com/articles/2008/6/4/facestat-scales-f...
It is definitely possible to create a VPS-based system to replace your dedicated servers. In fact, that is the direction a lot of people are going, because it's relatively cheap to spin up a new VPS to scale horizontally, as opposed to purchasing a new server. Without knowing what your needs are in more detail, I couldn't say with any confidence whether Slicehost or Linode would work for you, or something else.
Do note that many traditional datacenters are starting to offer some sort of "cloud" solution, or at least some solution involving virtual machines that they have made sure involves the word "cloud", for the buzz factor. So, you could find a reliable colo facility, and work with them to migrate to a VPS-like solution.
You don't own the servers at Linode. Colocation is putting your server in someone's data center. This is good if you have a large number of custom servers, but don't want to manage the bandwidth, power, cooling etc... yourself.
Yeah, I know what colocation is, and am wondering why you would bother in this day and age. I could see it being worth your while if you were a big enough company to have a significant number of servers and the people to run them. But I really mean 'significant'. For most startups, being able to scale with something like linode seems more advantageous.
In addition to custom hardware (like the crypto cards modoc mentions downthread) you also have to look at the potential liabilities you face. If you're involved in a HIPAA compliant environment, or one where you are storing large amounts of personal information, it may be a requirement that you have certain controls on physical access to the machinery and logical access to the data that are harder to guarantee with a VM Provider.
This isn't to say that a VM might not be perfectly acceptable for parts of your operation. But realistically, at this time if you look at the way most of the compliance documents for data security are written; you cannot be compliant in a suppliers shared virtualized environment.
There are some applications which benefit from custom setup hardware (cypto cards, extra NICs, etc...), you may want more network security than the single network or double homed boxes on simple public and private LANs (you may need isolated firewalled internal networks beyond what you can get from leased host providers). You also may want to drop in some of the various appliances out there for stats/analysis, spam/virus protection, google search boxes, etc...
We're expecting pretty linear growth, so scaling isn't a huge deal. Up until now we would regularly switch to a better server, stay there until we outgrew it, and then jump again. It's kept us relatively lean/current and our costs have stayed low as the cost/quality of hosting has changed (and we've gotten better at sniffing out good hosts).
Places like linode and slicehost would have been decent options in the past, but we serve 1-2 TB of data each month, so we like to have lots of bandwidth available. And while many dedicated servers offer that, our server admin is pretty picky about the hardware, so she'd like to be able to manage it on her own.
Out of curiosity, how easy is it to 'hook up' two separate Xen instances, assuming Xen is what slicehost and Linode run on? I'm not a server guy, but I actually share a slicehost plan (separate from this particular venture) with one of our fellow News.YC hackers, so I'm familiar with how excellent the company/service is. If they're really that easy to connect/scale then it might be worth the extra cost...