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What Is Colocation Data Center? A Quick Guide

Colocation refers to the idea of companies sharing a common space or “location” to store their data – typically in third-party data centers.

By paying rent, companies get the physical space to house their servers as well as maintenance support, cooling, security, and other benefits.

Let’s break it down further.

What Is Colocation? Understanding The Benefits

Traditionally, companies and businesses kept their servers and additional computer hardware inside “on-site” data centers – rooms where these servers were stored and maintained.

However, not all businesses had the physical real estate to host such rooms, so they would either have to cram everything within a small office space or buy/rent additional space to host their servers- which would, of course, cost a lot.

An additional problem with these on-site data centers was that they were super expensive to maintain. For example, in addition to paying for the land/ space for the data center, companies would have to pay for their entire cooling systems (installation and maintenance), and they would have to hire a technician or two who would fix any hardware issues that might arise.

Soon, companies and businesses realized that this was an inefficient way to store their data and that there was no reason companies shouldn’t keep their server in a single facility/ building to benefit from economies of scale and divide chunky costs like rent maintenance and cooling expenditure among them.

This is where “colocation” comes in. It’s basically the idea of companies sharing a common space or “location” to store their data.

More concretely, though, colocation is a service provided by third-party data centers where companies pay rent to get the physical space to house their servers, maintenance support, cooling, security, and other benefits.

Colocation services can either be unmanaged or managed:

  • Unmanaged

    Where the third-party data center does not provide additional technical support.

  • Managed

    Where data centers provide technical support in case your servers face hardware issues.

Companies choose between these two service plans based on their budget and self-maintenance capabilities.

So, What Is Colocation Hosting?

Colocation hosting is a similar idea to what we’ve discussed above.

Whereas colocation is a service that data centers provide to several businesses, colocation hosting is the practice of companies hosting their private servers in a third-party data center, i.e., when a business keeps its private servers in a third-party data center and pays the data center rent for the space that it’s servers occupy.

In other words, colocation is a service that data centers provide, and colocation hosting is the practice of businesses availing of that service.

When people learn about colocation hosting, they commonly ask how (if at all) colocation hosting is different from web hosting. Let’s take a look.

Colocation Hosting Vs Web Hosting: What’s The Difference?

The first thing you need to know is that all websites are hosted on a physical server.

However, it would be highly inefficient and costly for each website owner to buy their own server and maintain it by themselves or rent space for it at a data center.

For this reason (and more), website owners turn to web hosts (or hosting providers) – which are companies/ businesses that let you rent space for your website inside their servers and offer to handle all maintenance work for you. In contrast, colocation hosting requires businesses to buy their own servers.

Even the best web hosts keep their servers inside data centers, so, in this respect, colocation and web hosting are similar; both offer businesses and website owners storage room to keep their data. Although ultimately, both of them are different things.

Additional similarities and differences between colocation hosting and web hosting come about when we take a closer look at the different types of web hosting.

There are four major types of web hosting services out there – each hosting type stores website data into servers differently.

Therefore, each type will have different data center considerations.

  • Shared Hosting

    Shared Hosting is best for entry-level websites. It involves websites sharing server spaces with other websites – hence the low cost.

  • VPS Hosting

    VPS (or virtual private server) hosting involves websites sharing servers with other websites- except the number of websites sharing the same server is significantly lower, and the primary server has a separate virtual server dedicated to each site that it hosts. Check out the differences between Shared Hosting vs VPS.

  • Cloud Hosting

    This involves using networks of interlinked virtual/ physical servers to host websites (as opposed to other types where data is stored in a single server). Check out our guide to Cloud Hosting for more info.

  • Dedicated Hosting

    Finally, dedicated hosting is when a single website occupies an entire server- typically used by large-scale websites.

Pros & Cons of Using Colocation Data Centers

Now that we know what colocation hosting is (and how it’s different from web hosting) let’s ask ourselves why businesses see value in outsourcing server space to data centers in the first place.

Later, we will also consider some possible drawbacks.

Pros of colocation data centers

  • Data security

    Data centers provide server security by limiting physical access to your servers (i.e. only authorized people are allowed access).

  • Fixed cost reduction

    Companies don’t have to buy additional land/ cooling equipment. They can rent it and enjoy reduced costs.

  • Overhead cost reduction

    Since many companies store their data in data centers, they can reduce their overhead costs, i.e., they don’t have to hire maintenance staff or pay the electricity expense in full- it’s all divided.

  • Maintenance expertise

    Data centers have staff specialized in server maintenance, meaning they can do a better job than most in-house workers.

  • Scalability

    If a company wants to increase its data storage, it can do so without buying additional equipment space.

  • Space

    Outsourcing server space to data centers means saving space in office premises.

Cons of colocation data centers

  • Costly for startups

    Even with colocation hosting, businesses have to buy their own servers, meaning some startups may not be able to afford it.

  • Limited physical access

    If, for some reason, a business wants access to its server, it will have to exert additional resources, i.e., travel costs, since its servers are in an off-site location.

  • Delays in repairs/ maintenance

    If a business faces an issue accessing its data, it can’t fix it immediately- it will have to inform the data center first, resulting in delays.

  • Maintenance standards are limited

    Companies that set high maintenance standards for their servers are limited by the standards and procedures of their chosen data center.

Top Colocation Providers In The US

By now, you should have all the information you need to understand colocation hosting and whether it’s the right choice for your business.

However, if you’re stuck trying to figure out which colocation hosting providers would be best for you if you’re based in the U.S., here is a list of some of the top colocation providers you can check out and contact:

  1. CoreSite

    CoreSite is open in 24 different locations throughout the United States. Their primary focus is on maintaining high-quality services through things like high availability and low latency.

  2. Digital Realty Trust

    This is yet another highly reliable and reputable colocation provider. Digital Realty Trust differentiates itself by focusing on sustainability through its highly environmentally friendly data centers.

  3. TierPoint

    TierPoint operates in 20 different locations across the U.S., and it is known for the sheer number of colocation options it offers businesses- making it a popular choice among growing companies.

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