Colocation and Cloud Computing Demystified


Over the past two decades, cloud computing, as well as colocation services have become so ubiquitous that many people started interchanging the two concepts. This blog attempts to explain the underlying differences and similarities between these often misused terms.

Small and large companies typically have public-facing websites, mobile apps, or other technology solutions that enable them to do business with their customers. The worst thing that can happen to the company’s customers is their website, mobile app, or technology solution, are not reachable due to potential issues, such as power outages or internet outages, which can happen at any time (and typically happen at 2am).



To prevent the ability for these types of outages from occurring and imposing hardship to companies, IT administrators relocate a company’s physical server and related equipment into data centers. Data center buildings typically are hurricane-proof, have diesel generators in case of power outages, sit on multiple power grids, and usually have multiple internet feeds from several large-tier providers, such as AT&T, Verizon, etc. Data centers typically have massive numbers of server racks, and provide real-estate space for their clients’ servers and other networking equipment. Some of these data centers have armed guards who monitor the premises to ensure physical hardware security. Companies are essentially renting space from the data centers to relocate their servers to a hardened, more secure, and more efficient infrastructure setting. This ensures a much higher availability time of their services. Having a company’s servers physically located at a data center is termed as “colocation”. The company’s servers need to be maintained, managed, upgraded, fixed and cared for by the company’s IT administrators. The colocation facility simply provides power and internet. The rest is managed by the company, not the data center. If a server crashes, the company needs to fix it. If the server runs out of disk space, the company needs to fix it. If the server reaches maximum capacity in terms of computing capability, the company needs to fix it. Fixing these types of issues typically involves adding more servers, upgrading the servers, and/or replacing the servers, all provided by the company, not the data center. Recently, data center firms have started to provide services to address these issues.



While data centers have gained great reputation of being able to house a large number of servers for many large and small customers, Amazon, Microsoft, and other vendors decided to forgo having these centers available to the general public and started implementing services that would compete with data centers. Imagine being able to rent a server, and only pay for the time that it’s running. Shut it off, and there’s no more bill. Imagine still, being able to launch a server at a moment’s notice and it be available for usage within minutes. Servers come alive within minutes, web sites are instantly running and available. If a server crashes, others can take their place virtually instantly. This is the power of “the cloud”, and why many companies are embracing these fantastic capabilities in lieu of buying their own servers to locate and manage at a data center. One difference with cloud servers when compared with colocation servers is companies do not have physical access to their cloud servers. They manage them using remote management tools, such as Remote Desktop and/or other similar technologies. In addition, cloud providers offer other services, such as backups, replication of data across other cloud locations and many other services at a fraction of the cost of a company’s IT staff. Amazon boasts several dozen such cloud services, including text messaging, web server load balancing, storage on-demand, video compression services, and many others. A company only pays for the services they consume.

Whether a company wishes to have their own servers physically colocated at a data center, or opts to use a large cloud provider’s existing infrastructure and rent servers in an on-demand manner, the choices are available based on a company’s needs. The real question is – which is cheaper? The answer will be provided and discussed in an up-coming blog …