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Dedicated servers are the real deal. An entire physical server, dedicated to your site (or sites). This is generally the most expensive Drupal hosting option, but if you need guaranteed, high-end performance, it's the only way to go. Most hosting providers offer both managed hosting (they take care of troubleshooting, security, etc) and unmanaged hosting (you take care of everything). As with virtual private servers, you get full root access on the server.

Typically, the hosting provider will offer you a choice of several pre-built hardware configurations. Dual-core and quad-core servers are commonly available. In most cases, you'll also be able to specify how many hard drives you want, the amount of ram, and what kind of network connection you desire (10mbit, 100mbit, etc). Most dedicated server come with Linux or FreeBSD pre-installed, but a few also offer Microsoft Windows (usually at a higher cost).

See also: VPS Hosting and Shared Hosts.