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You're arguing for scaling up (vertical) instead of scaling out (horizontal). Both are valid approaches. Scaling out is preferred because your architecture is mode modular and you do not have to constantly buy bigger machines as your usage grows; you just add additional machines with similar capacity. The main problem with scaling up is that price and performance are not linearly related and eventually you will be limited by the performance available to one system. But it's a perfectly valid approach for certain scenarios.

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