What is a private cloud? | Ubuntu

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A private cloud is a cloud computing environment that is exclusively dedicated to a single entity or a service. Private clouds run on the organization's premises or in an external data center and are managed by the organization's operations team, or a managed service provider.
Private clouds often prove to be more cost-effective than public clouds when running workloads in the long term and at scale, which you can learn more about in our whitepaper. They are a building block in hybrid cloud and multi-cloud architectures, enabling bare metal, virtualization, storage, container and serverless services.
Build your own cloud today
Like other cloud architectures, a private cloud enables on-demand resource provisioning through a self-service portal. This improves developers' agility and simplifies the data center management process.
Private cloud software manages compute, network and storage assets that are available on individual servers, but are distributed across the entire data center. The software aggregates this hardware capacity into pools, and uses virtualization technology to divide them into virtual resources that are then allocated to virtual machines (VMs). By adding a containerization layer on the top, organizations can also provision containerized workloads on-demand.
With private clouds, all resources are available exclusively to a single entity or a service. They are not shared with other tenants, resulting in increased resource availability. Moreover, during heavy load periods private cloud can dynamically scale-out, providing the required amount of resources. The private cloud software can either be installed on the existing servers in the data center or a completely new infrastructure built solely for the purpose of the private cloud implementation project.
In principle, the main difference between private and public clouds is in their tenancy model.
Private cloud is a single-tenant environment where all resources are available to a single entity or a service. In contrast, public cloud is a multi-tenant environment where all resources are shared among various tenants (various organizations, services or end users) who typically do not know each other at all.
Another significant difference is in the total cost of ownership (TCO). Public clouds offer pay-as-you-go (PAYG) billing, which means they tend to be more economical in the short term, and on a small scale. However, as the number of workloads continues to grow, the costs of using the public cloud grow too, leading to an inflation of TCO. Thus, using a cost-effective private cloud as an extension of the public cloud infrastructure in a hybrid cloud architecture is key to optimizing infrastructure costs.
The main benefit of a private cloud is better economics compared to public clouds when running workloads long term and at scale. Well-designed private clouds provide the same capabilities as leading public cloud providers, while offering advantages in other areas over public cloud. These include:
Long-term cost savings
While building a private cloud infrastructure requires significant upfront costs, this investment pays off after a couple of years - even with dozens of lightweight VMs
Due to various additional charges, public cloud pricing is totally unpredictable. At the same time, private cloud pricing is usually fully transparent, enabling predictable budgeting.
Increased performance
As private clouds usually run on an organization's premises and there is no resource sharing, they usually provide better performance compared to public cloud infrastructure.
Architectural freedom
When building a private cloud, the organization decides which hardware and software to use, resulting in increased flexibility and architectural freedom.
Security and compliance
While public clouds are usually considered more secure than private clouds, in some cases having full control over the underlying infrastructure helps organizations to meet their regulatory compliance requirements.
While private clouds bring a number of benefits to organizations, implementing a private cloud infrastructure entails a number of challenges. Those include:
Due to significant hardware and software costs, private clouds are not as attractive on day 0 as public clouds. The cost benefits are typically felt later in the project cycle. To deal with that, organizations should always design the private cloud for price-performance by starting small and evolving according to their needs.
In a private cloud environment, organizations are responsible for capacity management to ensure the desired resource consumption. This creates an additional overhead on the internal cloud operations team. Using an effective observability stack ensures constant private cloud monitoring and proactive capacity management.
On-demand scalability
When a private cloud is running out of resources, it can dynamically scale out as long as additional resources are available in the data center. Without these additional resources, it may take longer to scale to higher demands, due to the long delays associated with the procurement process for new hardware.
The decision whether to host cloud workloads in a public cloud or in a private cloud is usually driven by economics.
While public clouds provide an immediate access to the infrastructure-as-a-service (IaaS) with no upfront costs, their TCO can grow rapidly depending on the number of workloads and the project timeframe.
On the other hand, private clouds prove to be more cost-effective when running workloads