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The advantages of colocating include all the advantages of dedicated hosting – you have the resources of the entire server and bandwidth to do with as you please. The additional benefit over dedicated hosting is the lower cost. Because you own the server, your monthly fees don't include charges for hardware maintenance and upkeep. On the other hand, your initial outlay will be larger because you have to buy the server. If the server is good quality and remains in service for a reasonable length of time, however, your overall costs will be lower with colocation.

The cost of colocation depends on the amount of space your server occupies. Data centers house servers in racks that in turn are housed in cabinets. Cabinets are usually 40 rack units in height, with each rack unit equal to 1.75'. The cases of server computers are measured in rack heights – 1U = 1.75'. Typical sizes for servers are 1U, 2U and 4U, so the physical size of your server will determine how much the colocation host will charge per month. Bandwidth is another factor affecting price.

There are several options available when purchasing a server and getting it to the colocation data center. If you live in close proximity to the data center you could buy a server locally and set it up at your own premises. Once it is setup you can personally deliver it to the data center. Another option is to buy the server from a mail order retailer and have them deliver it directly to the data center.

This is a good option if you are not located near the data center. It saves you the cost of shipping the server and the retailer will be responsible if the server happens to be damaged in transit. The disadvantage is that you have to set up the server remotely through a web interface. The third option is to buy the server direct from the host. Not all hosts are in the business of selling servers, but those that do may offer financing and setup assistance.

Colocation or Dedicated?

Colocation puts you in charge of the hardware, but that also means that you are responsible in the case of hardware failure. If you have signed up for dedicated hosting you are renting the server, so the host will replace hard drives or CPUs if they malfunction. The initial costs of colocation are much higher than dedicated hosting. You have to buy the server as well as insurance and software licences. All that is included in a dedicated hosting plan. Hardware upgrades are also more expensive with colocation because you have to buy the new equipment outright and pay to have it installed. Dedicated hosting plans usually allow you to upgrade either hardware or bandwidth at a reasonable cost.

The main advantage of colocation is the lower monthly costs when compared with dedicated hosting plans. Other advantages include greater control over network configuration and more flexibility. A colocation provider has to be chosen carefully. After all, they will host both your hardware and your data. Consider such details as security, network redundancy, protection from fire and earthquakes, and backup generators in the case of power outages.