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Centralized computing is where the terminals are attached to a central computer (a terminal server) that controls all the peripherals. The terminals may be dumb terminals or thin clients, for example.
It offers greater security over other systems because all of the processing is controlled in a central ___location. In addition, if one terminal breaks down, the user can simply go to another terminal and log in again, and all of their files will still be accessible. Depending on the system, they may even be able to resume their session from the point they were at before, as if nothing had happened.
This type of arrangement does have some disadvantages. The central computer performs the computing functions and controls the remote terminals. This type of system relies totally on the central computer. Should the central computer crash, the entire system will "go down" (i.e. will be unavailable).
Hybrid model
Some organisations use a hybrid model halfway between centralized computing and conventional desktop computing, in which some applications (such as web browsers) are run locally, while other applications (such as critical business systems) are run on the terminal server. This can be achieved by running a piece of terminal server client software on a standard desktop computer.