Dedicated versus Colocation


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Staff member
What are the basic reasons one should opt for dedicated servers versus colocation?

My take -
There are real world pros and cons to both leasing a dedicated server and to collating your own server, and the answer as to which you should select depends largely on your cash flow, the complexity of your information technology requirements and the number of servers you’ll need.

It’ll ultimately be a business strategy that is based on more than a fixed cost-per-month expense. It’s a decision that should be based on the IT resources under your control that will chart the success of your business for years down the road.

Your thoughts ...
Clients of dedicated server hosting lease an entire server housed in an off-site data center dedicated solely for their use and without anyone sharing the facility. Clients of colocation lease a rack or a cabinet in an off-site data center to house their server hardware & share the other services with other colocation subscribers. While they are both on a lease, one has the entire data center to himself, while the other shares it with others.

Another significant distinction is that you own the hardware with colocation, giving you complete control over the hardware and operating system you use. Still, the service provider owns the hardware with dedicated hosting, requiring you to pay for machine updates.
Dedicated servers provide several advantages over other types of servers. They are usually more costly, although this can be countered by improved performance and dependability. Dedicated servers also have greater resources available (memory, CPU, hard drive space, and so on), allowing them to handle more concurrent requests. Because there are fewer moving parts, their setup is also easier to maintain than that of a typical server. Finally, dedicated servers can increase the security of your website or application.

There are several benefits to selecting a colocation hosting service. Colocation hosts are often placed in large urban regions, making it simple for corporations to select a suitable location. Furthermore, many colocation providers provide high-speed access and enough bandwidth, which may be quite beneficial for organizations with significant web traffic. In addition to these advantages, colocation providers frequently provide lower pricing as well as extra services such as security and disaster recovery plans.

Both services have their own advantages and disadvantages. Both are great services for people who need high-performance servers. But ultimately, it comes down to personal preferences and requirements.
Some of our clients who choose the colocation route look for long-term cost savings. Rent a machine for $100/month or colocate it for $50/month, long term if you plan to use the machine for many years it will pay itself back. With that said, some like the option to upgrade machines every year to the latest specs and as such rental is far better option.
From client's point of view it is mostly about recurring fees and TCO. Colocation of own equipment increases the TC, but lowers the monthly recurring fee. Plus, if any company does not want to deal with hardware, they better use dedicated servers.
Dedicated is usually chosen by clients with a lot of data and high website traffic. If the server is rented from a professional hosting provider, it is usually referred to as dedicated server hosting.

Essentially, Colocation services involve customer equipment hosted in a data center provided by the Colocation Service Provider. Therefore, the customer must have their own equipment to select these services.
A little late to the party.
There are quite a few positive and negative reasons for both. Lately we have been pushing a lot more towards the dedicated server market as we have filled up hundreds of racks with colocation and quite a huge amount in dedicated servers.

From a providers aspect there are a few things.
1. Offering colocation has a much lower profit margin.
2. Colocation has a lower capital requirement.
3. Dedicated servers have a higher profit margin, but higher expense and need for capital.

When it comes to customers those same aspects come into play.
1. Colocation has higher remote hands fees ideally suited best for local or people who don't require a lot of changes to their equipment. Reselling dedicated servers isn't the best fit for colocation if you don't have someone local and require a lot of changes to devices. Offer standard configurations and stick to those.

2. Colocation can save you quite a bit of money. However, once you have replacement parts and more locations it starts to build up and become a lot of work managing multiple locations.

I would only suggest colocation if you have more high end systems that otherwise would cost quite a lot of money each month and if you plan on using those systems for 3-5 years. Otherwise renting is a much better option even then it still often times comes out being on top as you are not left with useless equipment sitting on pallets. :) PS anyone want to buy a bunch of equipment on pallets?
I think the decision to choose between dedicated hosting and colocation largely depends on the specific needs of your business. Dedicated hosting can be a great option for businesses that require a high level of control and customization over their server environment. With dedicated hosting, you have exclusive use of a server and can install your own software and configure it to your needs.
I would say a major benefit to dedicated servers rather than colocating is upfront cost. If you need newer hardware a decent server can quickly cost thousands of dollars. Thus, a major factor is how long you plan to comission a server for.
With everything recently, we conducted our research on this topic, compared the cost of hosting your server with a provider or renting a dedicated server, and we were very surprised by the result.

It would seem that it should be more profitable to place your server on colocation, but for some reason, the prices for these services are only slightly lower than renting a dedicated server from the same company.

It turns out that, taking into account the depreciation of equipment, it is more profitable to rent a server and there is no headache with replacing or updating equipment, as well as paying for an additional Internet channel or electricity.

Paradoxically :)
Customers of dedicated server hosting lease a whole server that is located in an off-site data center that is exclusively theirs, without the use of any other customers. In an off-site data center, clients who use colocation lease a cabinet or rack to host their server hardware and share the other services with other colocation subscribers. While they both have a lease, one is the only person using the data center, while the other is sharing it with others.

With colocation, you have full control over the hardware and operating system you employ since you own the gear. This is an important distinction. With dedicated hosting, the service provider still owns the hardware, thus you are responsible for any system changes.