Also known as: Colo
Colocation (colo) is renting space, power, cooling, and network connectivity in a data center for hardware you own — you keep your own servers while outsourcing the building around them.1
Overview
A colocation provider sells you a slice of the facility — a few rack-server units, a full cabinet, or a locked cage — plus metered power, cooling, and uplink bandwidth. You buy, install, and maintain the machines; they guarantee the environment and uptime. This sits between running a home server (you own everything, including the room) and renting compute outright.
Where it fits
Colocation suits organizations that have already invested in hardware, need physical control of their machines, or have compliance reasons to keep ownership, but lack a reliable facility of their own. The alternatives are a fully provider-owned dedicated server, a managed hosting arrangement where the provider also runs the software, or cloud computing where you rent capacity with no hardware at all.
Sources
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Colocation centre — Wikipedia, on renting data center space for customer-owned equipment. ↩