What are the basic differences between colocation and dedicated server hosting?

Colocation service is a hosting service where the website owner puts his server on a facility owned by a colocation hosting provider. The owner owns the server, the routers as well as the other hardware and software that are kept in the data center. The role of the colocation provider is to provide for the electric and power needs to keep the server running, internet access and storage facilities. One of the most basic reasons why businesses opts colocation is that they may have outgrown their available space and the only other option would be to place it in another location rather than building or retrofitting their present structure which would be very costly.

Dedicated hosting is a hosting service where the server that is housed in the data center as well as the other equipment and software used in the operation of the server is owned by the hosting service provider. Basically, the customer does not get to own the server but rather only rents it. The hosting company provides all the necessary services needed to run the data center including maintenance, backup and security. Though the company owns the server, the website owner enjoys complete control over the site’s content and build but the company gets to decide when to upgrade the server.

Their very basic difference lies in the fact that colocation servers are owned by the website owner while dedicated hosting servers are fully owned by the hosting company and are only rented by the website owner.

What similarities do colocation and dedicated hosting share?

In reality, colocation and dedicated hosting share a number of similarities which is the reason why people often confuse colocation with dedicated hosting or dedicated hosting with colocation. These similarities are the following:

  • Both dedicated and colocation servers are exclusively dedicated to your website which means that you do not share its resources with any other website.
  • Both are considered to be expensive compared to other hosting solutions however both are also recognized to bring benefits that far outweigh their cost.
  • Dedicated and colocation servers are mostly used by large companies and websites that value hands-on control, privacy, security, space and the vital resources of their servers.
  • Both come with the option to be managed or unmanaged. Managed means that the hosting provider takes care of everything for you, save for those that you want to manage yourself while unmanaged hosting means that you are responsible for everything in your website.

How can I compare colocation and dedicated server hosting solutions?

Although both hosting solutions share some similarities, it is quite difficult to compare both of them in terms of performance. It is hard to compare them according to their performance as server offered in dedicated server hosting can also be used by owners of colocation hosting. One can only compare them clearly on an economic point of view, that is to compare them as to their prices. Let us try to take into consideration Vault Network’s pricing on both hosting solutions. (Table taken from www.vaultnetworks.com.)

1. Colocation:
Item Upfront Cost Monthly

  • Server 1 $1,499.00 N/A
  • Server 2 $1,499.00 N/A
  • Switch $ 300.00 N/A
  • Firewall $1,486.00 N/A
  • Space (1/4) rack $ 99.00 $ 150.00
  • Power (5 amps) N/A $ 90.00
  • Bandwidth (5Mbit) N/A $ 39.00
  • Sub-total $4,883.00 $ 279.00
  • Taxes (7%) $ 341.81 $ 19.53
  • TOTAL $5,224.81 $ 298.53

2. Dedicated Server hosting:
Item Upfront Cost Monthly

  • Server 1 N/A $ 229.00
  • Server 2 N/A $ 229.00
  • Switch N/A N/A
  • Firewall N/A N/A
  • Space (1/4) rack N/A N/A
  • Power (5 amps) N/A N/A
  • Bandwidth (5Mbit) N/A N/A
  • Sub-total N/A N/A
  • Taxes (7%) N/A N/A
  • TOTAL N/A $ 458.00

The upfront cost of colocation is definitely higher compared to dedicated hosting where you need to pay nothing upfront. However, the monthly fee of colocation hosting is also definitely lower compared to dedicated hosting. This shows that although you need to spend much upfront, you get to save and benefit from colocation hosting in the long run.

Colocation vs. Dedicated server hosting: Which is better?

The answer to the question of which is better between colocation and dedicated hosting lies is really dependent upon the choice of the website owner. They only differ in the ownership of the servers which puts them at par with each other in terms of performance as owners get to choose the type and specifications of their servers. The major difference is in the price, if you want to escape paying a huge upfront amount yet pay a bigger monthly fee, go for dedicated hosting. But if you are willing to take the risk of spending a bigger amount upfront and get to enjoy the fruits later, then colocation is definitely for you.