Colocation (also known as 'co-location' or 'colo') refers to the practice of renting space in data centers of third-party service providers to place personal servers and related hardware equipment. Organizations who lack the expertise, resources or desire to build, maintain and manage their own IT infrastructure often opt for colocation. The service provider apart from providing space in its data center is also responsible for bandwidth, power, IP address, racks, cabinets, security, cooling, etc. Space is rented out in terms of 'racks' and 'cabinets'.
This is, in contrast, to cloud hosting where computational resources are provided over the net by physical servers belonging to the service provider. In the case of colocation, the server and related hardware component are owned by the business itself; it is just looking for an option to place its server in data centers managed by server colocation hosting providers and benefit from their technical expertise.
For some organizations, not intending to spend a fortune building their own infrastructure, Server colocation could be an ideal option. However, there are certain downsides to it as the distance between the data center and the organization may result in escalating cost whenever there is a need to manually touch the system.
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