By one analyst’s count, there are more than 400 providers of colocation services offering
a huge range of options and prices.
Colocation is different from traditional hosting, which IT folks may be
more familiar with. In a hosting situation, usually the service provider owns
the hardware, software and other
infrastructure that serve up your applications. Providers can specialize in
different types of services — application hosting, website hosting, database
hosting and the like. In contrast, colocation customers own their servers, routers and other hardware and often have
their own employees tend to this gear.
Some colo providers specialize by going after small and midsize businesses,
financial services firms or other categories of customers.
There are two general types of colocation providers: wholesale and retail.
Wholesale colocation providers maintain large facilities — big enough to handle 10,000-square-foot data centers,
for example. except for the power and
cooling infrastructure, it’s essentially
empty space. The customer, or tenant,
does the work of rolling in the servers
and racks, cabling up the gear and making sure it all works.
on the retail side, spaces are usually
smaller — down to “cages” that hold
individual servers, for example — and
the vendors offer more setup help, for
a price. In general, says Jeff Paschke,
an analyst at Tier1 Research, you can
expect to pay more for retail colocation
than a wholesale offering.
Also, be on the lookout for the ever-present upsell. Darin Stahl, an analyst
at Info-Tech Research Group, says many
vendors are eschewing “straight” colo
and will provide only managed services,
where the vendors service and support
the customer’s equipment. They do that
because managed services can yield
margins of “at least” 25%, he explains.
The bottom line is this: Make sure to
look for a colo partner that’s going to
give you what you want — no more and
— JoHAnnA AMBRoSIo
power, generators and all of those things, as well as
network connectivity,” he says.
For his part, Burch feels that using a coloca-
tion service — Kemet Electronics chose Columbia,
S.C.-based Immedion — allowed a faster, less costly
deployment without sacrificing convenience or func-
tionality. “We were able to get everything set up within
a two-month period, and that included the building
out of office space, even converting some office space
into raised-floor data center space, which is pretty
Finding a suitable colocation provider can be just
as challenging as scouting a site for a traditional data
center. “We looked at taking a building and convert-
ing it ourselves,” Williams says. After deciding that
overhauling a stand-alone building wouldn’t be cost-
effective, LexisNexis started looking for a colocation
provider. “I would say that we probably spent six
months searching for a site, and we probably looked at
no less than 30 different locations and providers — it
was a very extensive search,” he says.
Space at a Premium
Of course, colo space can be tight in some locations,
so expect to pay a premium in those areas. Tier1’s
Paschke explains that the economic slowdown and
resulting credit crunch put the kibosh on a lot of data
center capacity build-outs. Many enterprises put their
own data center construction plans on hold, and colos
reined in their expansion activity as well. So nowadays,
organizations considering turning to a colo may find
that the vendors don’t have as much data center space
as they need.
Of course, the market for data center space varies
from location to location. A recent Wall Street Journal
article, for instance, talked about an oversupply in the