How to shop for a colocation provider

Colocation facilities can lift the burden of running your own data center, but they’re not all created equal.

Visualization of data in motion through a data center corridor of servers.
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If you want to move assets out of your data center but for whatever reason can’t shift to the cloud, a colocation, or “colo” for short, is increasingly a viable option.

Colo is where the client buys the compute, storage, and networking equipment but instead of putting it into their own data centers, they put them in the data center of a hosting company. They still own and manage the hardware, but they don’t have responsibility for manage the facilities—heating, cooling, lighting, physical security, etc

As such, colocation facilities attract considerable interest from enterprises. IDC puts the 2020 US colocation market at $9 billion, growing to $12.2 billion by 2024 for a compound annual growth rate (CAGR) of 8%. Grand View Research estimates the global data-center colocation market size was valued at $40.31 billion US dollars in 2019 and is expected to grow at a CAGR of 12.9% from 2020 to 2027. Gartner makes the bravest prediction, saying that by 2025, 85% of infrastructure strategies will integrate on-premises, colocation, cloud, and edge delivery options, compared with 20% in 2020.

Colo providers in general are located in cities where they can be closer to customer sites, shortening the last-mile connection and so reducing latency. These providers include, among many others, AT&T, CenturyLink, Verizon, Digital Realty Trust, Equinix, Internap, QTS, and Coresite Realty.

There are pros and cons to both colos and on-premises data centers, according to Chris Brown, chief technical officer for the Uptime Institute. Upsides of colos include flexibility for customers to scale up and down as needed, and the cost benefits that come with the economies of scale achievable with a large, commercial data center.

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