>In a way you're talking about private vs public cloud. The dedicated/redundant option is like a very small private cloud, the second option would be like public cloud. You can Google "private vs public cloud" for some information.
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>Your choice will probably be driven by customer needs, not wants. For example, everyone wants 100% uptime but that's not achievable at any price, so you have to decide how much downtime is acceptable. What is the cost, to the customer, of downtime? How fast and consistent does performance need (not want) to be?

Thanks