In 1998 We bought a Pentium II 333 and put it on a dual CPU motherboard with 256MB of RAM, a DPT smart raid with 64MB RAM and three SCSI Seagate Cheetah 9GB hard drives (Raid 5). This was our pride and joy and cost us over $9,000 (later we added another 256MB of RAM and a second Processor). Add to that the collocation cost of $1500 a month for 300GB of burstable traffic and we were into this thing for a lot of cash but as far as dedicated servers go this was kick ass!
On a side note, our server was right next to the local lottery corporation's two servers which cost them close to $30,000 (they were running Windows NT) and our one server outperformed their two servers dedicated to the local lottery website. In fact they had to reboot their machines at least once a day and our server running Redhat Linux was rock solid requiring a reboot usually only when we performed a hardware upgrade. We were doing over a million web server hits a day which worked out to about 20,000 unique visitors a day.
The next addition to our dedicated web servers was a dual Pentium II 450 with 512MB RAM. It had a DPT smart Raid 128MB (I think it was 128MB) and three SCSI Seagate Cheetah 18 GB drives in raid 5, running Linux Redhat. That server handled over 1.5 million server hits (30,000+ people) per day without breaking a sweat.
By the time I left the company it had 3 web servers, each with redundant Ethernet cards going to redundant switches and each switch went to a separate router within the collocation facility. We also had battery backups for everything and a keyboard mouse and monitor. What I am getting at here is that all the equipment was purchased with hard earned cash which could have been doing other things for us. Keep this in mind when you read over the server hardware cost page.
If you think those dedicated servers were impressive for their time wait to read the next section in my evolution of web servers which covers high end servers from the year 2000.