The early servers were tower servers, so called because they were tall in height and took a lot of space and resulted in 'server-sprawl' in data-centers. The 90's saw the introduction of rack servers that were compact and saved a lot of 'real-estate' in the data-centers. A standard rack is 19 inch wide and 1.75 inch high. This dimension is called 1U. So a server component may occupy 1U, 2U or 4 half-U. The most common computer rack form-factor being 42U high, this configuration allows for 42 servers to be mounted on a single rack. Each server has it own power supply and network and switch configuration.
In the past few years, blade servers are gaining a lot of popularity. The advantage of blade servers is that instead of having a number of separate servers with their own power supplies, many blades are plugged into one chassis, like books in a bookshelf, containing processors, memory, hard drives and other components. The blades share the hardware, power and cooling supplied by the rack-mounted chassis -- saving energy and ultimately, money.
Another advantage is that enterprises can buy what they need today, and plug in another blade when their processing needs increase, thus spreading the cost of capital equipment over time.
In a rack server environment, typically 44% of the electricty consumption is by components such as power supplies and fans. In a blade server, that 44 percent is reduced to 10 percent because of the sharing of these components.This gives the blade server a tremendous advantage when it comes to electricity consumption and heat dissipation.
The only current disadvantage of blade servers is the vendor lock-in that comes in when you buy a blade environment and the system management software. In a rack system, it is possible to mix and match servers inside of a rack and across racks at will.