eh, sounds like this guy is selling atom boards, which are relatively modern. Now, they don't use ECC ram (and I fail to understand why he doesn't throw in 2GiB ram rather than one; if he put int 2GiB, he'd be competitive with my 2GiB VPSs.) and they are slow, cheap hardware, but speaking as someone who sells VPSs for a living, for some things, having a box to yourself is much better than a vps, even if the cost per performance is higher.

Now, my experience with the atoms (and why I'm not selling 'em) is that they use more power than you expect; 50w each or so, down from 75w each for a core2duo with 8GiB ram. So I'm guessing this person is also in a region where power is cheaper than it is for me. (I am in the SF bay area, and thus I pay enough for power that margins on a power-hungry atom system would be rather small.)

You can get the operations overhead per machine down with a good pxeboot/automated provisioning system. some larger places I've worked, provisioning 5,000 machines was a relaxed afternoon of work. Yeah, physical servers are a bit more work than virtuals, but they don't have to be that much more work, if you have a good system.

That said, getting a VPS on modern dual-socket 8 or 12 core boxes with ecc ram usually gives you more bang for your buck, if the security tradeoffs are worth it.