>>I'd go with VMs.
>>
>>(a) If you have a dedicated server and it goes down your out of business. Most cloud services will automatically spool up a replacement instance.
>
>The ISP has a full VM host redundancy. They provide two. At first, we will have to pay in double for the VM host related cost as I would want to have full redundancy in there.
>
>>(b) Most cloud services can be configured for a guaranteed number of cores (Amazon has 'Burstable' options where credits for CPU under use can be used against high usage periods). AFAICS bottlenecks are more likely to be at the NIC level - but that would apply to dedicated servers as well.
>>(c) If you use VMs it's easier to scale up/down as demand dictates and you only pay for what you use.
>
>Yes, correct. With dedicated hardware, once I have reached the limit, we would have to request a service ticket and request them to add more physical cores and RAM to make them available for us.
>
>I see goods and bads between both environments. This is not an easy one to decide.

Can you reveal the actual ISPs that you are considering ?