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How does a cloud server work?

Businesses can use cloud computing services for anything from running high-performance processing power workloads to disaster recovery. With major providers offering a vast range of cloud servers, the possibilities are almost endless.

At its most basic, the meaning of cloud server is a virtual machine hosted on cloud computing resources. Unlike on-premises server resources, cloud servers are available from anywhere with an internet connection. This releases businesses from being tied to one physical location.

In this blog, we’ll define what a cloud server is. Then, we’ll explore how it works, compare it to other types of servers, and highlight some of its key benefits.

What is a cloud server, and how does it work?

A cloud server is a virtual machine created and managed through a process called virtualisation. This uses software called a hypervisor to split a physical server into multiple virtual ones. Each functions independently — although they run on the same bare metal server — meaning businesses can tailor them to specific needs.

Cloud servers are hosted on physical data centre infrastructure by a cloud service provider that makes them available to use over the internet. For the user, it’s almost the same experience as using on-site hardware. Everything gets handled remotely, but with someone else looking after the maintenance, availability, and upkeep.

Not only do cloud servers have performance and pricing benefits, but they also are incredibly versatile. Examples of cloud servers that businesses may use to provision many types of workloads and services include:

Web hosting

E-commerce platforms

Cloud data storage

Software as a service, infrastructure as a service,, and platform as a service environments

Various operating systems

In this way, cloud services give businesses scalable and flexible solutions. Because the cloud hosting provider manages everything, there’s no need to worry about in-house hardware or maintenance. With an internet connection, businesses can access a cloud computing environment.

Cloud servers vs. other servers

The choice of server types typically comes down to business processes and needs, as each has unique benefits, limitations, and considerations. In some cases, there may also be use cases for diverse types of servers combined into a multi-cloud arrangement.

Below are the most common types of servers compared.

Cloud server vs. physical server

A cloud server is virtual. Users access it via the internet, with many significant business benefits, such as flexible resource scaling. On the other hand, a physical server is hardware-based. It requires physical maintenance and upkeep and is often on-site or in a data centre.

In terms of costs, physical servers require a larger upfront investment. They’re also often limited to users in a specific location. However, cloud servers are often more cost-effective — usually with a pay-as-you-go pricing model — and require less upkeep.

Cloud vs. dedicated server

A dedicated server is a physical machine exclusively used by one organisation. It allows complete control and customisation options, with its entire central processing unit computing power dedicated to chosen tasks.

However, that comes with some potential downsides. As the owner, the business is responsible for its upkeep and must handle any potential outages and downtime. But with a cloud server, the provider handles the maintenance. For greater control, a dedicated server may be a good start — otherwise, cloud servers offer flexibility and are generally more affordable.

Cloud server vs. local server

A local server is a piece of infrastructure hosted on a local network or computer. Being local, it gives direct control — but it severely lacks scalability compared to the best cloud solutions.

Local servers can be useful for smaller, localised tasks and apps. However, for growing businesses looking to scale or give employees remote access, a cloud server offers much more versatility and is manageable from multiple locations.

Types of cloud servers

Generally, there are three primary types of cloud servers: public, private, and hybrid. Each has its strengths and downsides, depending on business needs.

Public cloud servers: Managed by third-party providers and shared among multiple users, public cloud servers are massively scalable and cost-effective. Businesses only pay for the resources used, with no upfront setup costs. Among their many use cases, public clouds are great for businesses that want flexibility without managing infrastructure.

Private cloud servers: Dedicated private cloud resources allow businesses to host in house or by third-party data centres. They’re exclusively for individual business use only. Private resources also give you more control and security, making them an excellent option for businesses dealing with regulations and sensitive data.
Hybrid cloud servers: Hybrid cloud servers give businesses the best of both worlds, combining the benefits of public and private cloud into a tailored solution — generally by establishing connectivity between the two using a cloud on-ramp in a colocation data centre. For example, a business might save regulated data on private cloud storage, while placing less-sensitive workloads in the cost-effective public cloud.

Picking the right cloud server depends on your business needs, budget, and preferences. Public clouds are fantastic for their scalability and pricing. Meanwhile, private clouds give greater control and security but require a higher investment and more expertise. Hybrid clouds also need knowledge and maintenance but balance the benefits of both cloud types — allowing businesses to choose the right environment for each workload.

Benefits of cloud servers

There are many potential benefits of a cloud server for all types of businesses. These include:

Scalability: Whether a business has a public or hybrid cloud infrastructure, it can adjust resources up or down based on demand. This eliminates paying for unnecessary resources while also handling spikes in demand without manually optimising the cloud setup.

Easier management: Private cloud servers require ongoing maintenance. However, public cloud data centre service providers perform essential tasks like maintenance, security, and software upgrades. This frees IT team to look after other tasks.

Reliability: Servers on cloud infrastructure consider redundancy in their design. That means if one part should fail, another would take over to keep the system running, helping promote uptime and business continuity.

Global accessibility: Users can access cloud servers from anywhere with an internet connection. This is one of the primary cloud server advantages for businesses with remote teams, allowing seamless teamwork no matter the location.

Cloud servers for businesses

Cloud servers are a great option for adding flexibility, scalability, and reliability to an IT infrastructure. They can host and run many distinct types of workloads — from websites to applications and data storage — and can be configured to suit unique business needs.

Want to leverage a cloud strategy that unlocks greater flexibility and scalability? Contact Digital Realty to discover how PlatformDIGITAL®, our global data centre platform, empowers businesses with cloud-ready architecture in the locations where they operate. Plus, check out our cloud solutions page to see design use cases to elevate cloud strategies.

Frequently asked questions

Why do we need cloud servers?

Cloud servers give businesses a more scalable, flexible, and cost-efficient way to host computing resources. It allows for easier accessibility while also lowering the burden of maintaining physical infrastructure.

What is the difference between a cloud server and a network server?

A cloud server is hosted virtually in a cloud environment and stored in a data centre. It’s also accessible via the internet. On the other hand, a network server is a physical or virtual server used within a local network for less-demanding tasks.

What is the difference between a cloud server and a normal server?

A normal server is a piece of computing equipment physically set up and maintained in house or in a third-party facility. Meanwhile, a cloud server is operated virtually and is accessible over the internet.

Is the cloud the same as a server?

No, the cloud is an overarching term that refers to a computing environment that hosts virtual servers. Meanwhile, a server is a device that hosts and runs individual workloads.

Is the cloud a server or a database?

The cloud is neither a server nor a database. Instead, it refers to the massive collection of cloud services that can host things like servers and databases.

Is the cloud better than a physical server?

Some workloads may benefit from running on a cloud server. Others might be better suited to physical servers. Generally, cloud services are an excellent choice for scalable, cost-efficient, and unregulated workloads, while physical servers are more challenging to manage but might be better suited to storing sensitive data.