If you're coming from a small or middle-sized company to a corporations like HP or IBM probably you will not a clear defined idea on the 2 types (2 dimensions) of system Scaling (Horizontal and Vertical scaling). I know from my pesronal experience that in small companies – all needed is to guarantee a model for as less probels as possible without too much of defining things and with much less planning. Other thing is being a sysadmin in middle-sized companies, often doesn't give you opportunity to discuss issues to solve with other admins but you have to deal as "one man (machine) for all" and thus often to solve office server and services tasks you do some custom solution.
hence for novice system administrators probably it will be probably unclear what is the difference between Horizontal and Vertical Scaling?
Vertical Scaling (scale vertically or scale up) :- adding more resources(CPU/RAM/DISK) to your server (database or application server is still remains one).
Vertical Scaling is much more used in small and middle-sized companies and in applications and products of middle-range. Very common example for Virtual Scaling nowdays is to buy an expensive hardware and use it as a Virtual Machine hypervisor (VMWare ESX). Where a database is involved using Vertical Scaling without use of multiple virtual machines might be not the best solution, as even though hardware might suffice (creation of database locks might impose problems). Reasons to scale vertically include increasing IOPS (Input / Ouput Operations), increasing CPU/RAM capacity, and increasing disk capacity.
Because Vertical Scaling usually means upgrade of server hardware – whenever an improved performance is targeted, even though if Virtualization is used, the risk for downtimes with it is much higher than whenever horizontal scaling.
Horizontal Scaling (scale horizontally or scale out):- adding more processing units (phyiscal machine) to your server (infrastructure be it application web/server or database).
Horizontal scaling, means increasing the number of nodes in the cluster, reduces the responsibilities of each member node by spreading the keyspace wider and providing additional end-points for client connections. The capacity of each individual node does not change, but its load is decreased (because load is distributed between separate server nodes). Reasons to scale horizontally include increasing I/O concurrency, reducing the load on existing nodes, and increasing disk capacity.
Horizontal Scaling has been historically much more used for high level of computing and for application and services. The Internet and particular web services gave a boom of Horizontal Scaling use, most companies nowadays that provide well known web services like Google (Gmail, Youtube), Yahoo, Facebook, Ebay, Amazon etc. are using heavily horizontal scaling. Horizontal Scaling is a must use technology – whenever a high availability of (server) services are required.