Colocating the server gives you the greatest flexibility. You get to choose the hardware configuration of the server and the software that goes on it. The hosting company maintains the connection to the Internet and deals with environmental details such as uninterruptible power supplies (UPSs), fire controls, and air conditioning. On the other hand, you're responsible for that server's upkeep.
Companies that offer colocated hosting say they're moving away from this service and encouraging their customers to rent a dedicated server. This means renting an entire server from the hosting service, but having the hosting company service and maintain it.
When you opt for dedicated server colocation with the hosting company, you pay for the physical space that your server takes up. Colocation hosting usually requires a higher startup cost than renting a server from a hosting company, according to figures from Digital Nation. The server itself will cost around $4000 for a low-end model, and $9000 for a midrange server. A half-rack of space at a colocation facility will cost between $500 and $700 to start up and the same amount each month. Finally, you'll have to purchase a switch or a router, which will cost between $1500 and $2000 at the low end. This would result in an initial outlay of at least $7500 -- and it doesn't include the costs of staff time for setup and configuration, or the cost of equipment depreciation, insurance, and the standby equipment.
There's More to Know About Colocation Hosting
So colocation is more expensive than managed webhosting, and your physical access to your equipment is limited by the datacenter’s business hours and its physical distance from you. It is imperative to choose a colocation host that is reasonably nearby, and there will be special considerations if there is a possibility of the business moving. Depending on how often you access the equipment, increased distance will greatly affect the value of the current service agreement. There is also the option to pay the datacenter to manage the equipment, but that requires significant additional costs.
Nevertheless, there are very real advantages to colocation, and in the right situation, these advantages can greatly outweigh the disadvantages discussed above. Perhaps the biggest advantage is bandwidth and associated costs. The best colocation datacenters have multiple backbones with redundancies that allow for extremely reliable, high-speed connections. Since the client only pays for usage, this provides all the advantage of a T1 connection without the vast overhead.
In addition, colocation datacenters tend to offer power protection that is unrivaled save by the largest corporate facilities. Power services include redundant power lines, onsite backup generators and multihomed networks. Furthermore, colocation facilities have specialists on site and a stock of spare parts so that when failure does occur, they can rectify it quickly. This allows for a true guarantee of 99.99 percent uptime or higher, which is often promised but not realistic in a managed environment.
Moreover, a colocation service can provide much greater security than the typical office environment or managed solution can. A building suitable to house a colocation facility will have utmost protection against forced entry, unauthorized access, fire and natural disasters. Your equipment in particular is locked in a cage that only you and personnel that you approve can access. A colocation service will also provide firewalls, intrusion-detection mechanisms and other network security measures. There is also the advantage of there being no direct association between who owns the equipment and where it is stored.
The question remains, is colocation right for you? As a rule of thumb, colocation tends to be the right option for the business that has outgrown managed webhosting but is not yet large enough to make in-house webhosting and a dedicated IT department practical. Think of colocation as a compromise between managed and in-house webhosting. What does outgrowing managed hosting mean? Managed webhosting tends to force you to think within the narrow preconceptions of the industry. Once this narrowness begins to interfere with your vision, you have outgrown it.
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