The introduction of the Virtual Dedicated Server, or VDS (sometimes called the Virtual Private server or VPS) helped close the price and performance gap between shared hosting and dedicated hosting. Several Virtual servers could be placed in one machine, allowing the overhead costs to be split between users. Each VDS server runs a special program which creates a number of "virtual servers", each behaving like their own dedicated server. Every virtual server boots its own copy of the operating system, and has its own virtual hard disk and network connection. Individual servers cannot see each other's files or directories, so there is no need to worry about setting access permissions in order to keep other users out of your data. Most VPS software also makes it impossible for one site to "hog" their server's system resources.
A VDS/VPS customer will receive at least one thing: an account username and a password. At the lowest fundamental level, this user will now interact with his/her new virtual server account just as if it were a real dedicated server. For experienced users this can be a very good thing, but novices will almost certainly be overwhelmed. Beginners might want to order a VDS with a control panel installed. The control panel will allow easier administration of the server. Everything comes with a price, though, and a control panel will generally set a user back an extra $5-20 per month. Control panels will also use up some of the server's processing power, so a user with a control panel will generally need a slightly beefier VPS.