Web Hosting Talk : Web Hosting Main Forums : Colocation and Data Centers : Reasons to colocate

[derekraines]

Let's make a list of reasons to colocate (ie. how much money you can save, etc, etc).

[Aushosts]

I personally don't see colocation as worth the money...
With leasing a server you can easly upgrade, whereas with colocation you gota send a new box. Look for something like lease to own boxes or something.
Just my throughts

[eddy2099]

Some said that it is cheaper to add components to Colocated system because you just pay a one-time price instead of paying the hiked prices which Dedicated Server host charged for upgrades. But that does not installation and replacement cost.

But I am with SpiritAu, I do not see colo begin worth the money because in the end, you get an outdated system which might not handle the requirements of the future.

I guess the major reason is at the end, with the colo, you get something to keep. While with the lease, there is nothing.

[Alex042]

With leasing a server you can easly upgrade, whereas with colocation you gota send a new box.

Not necessarily true. If you use a local colo facility, you could just walk in and do the upgrades yourself in a matter of minutes. I'm considering a colo facility about a 20 minute drive from my place just for this reason. That way I know what hardware I'm getting so if I want a nice industrial rack mount server, I know I've got one instead of a cheap tower thrown together from spare parts. I can build a server meeting common specs for the price of a couple of months lease time. And who really knows what leased servers really consist of except those in the datacenter. Some datacenters may use new parts, others may not so you may have a hard drive that's already been through the grinder or you may get a new one.

As for leasing, I guess one of the advantages of this is being able to get out of the business without too much of a capital investment.

[Sprynex]

Colocation is alot better then dedicated if you can afford the machine.. you can't look at places like rackshack/dedicatednow who use breadboxes and farm out servers like no tomorrow. If your running a serious business that demands pure quality, you get a nice server for yourself (whatever your preference is - ours is dell).. you won't find dells on dedicated.. not the enterprise quality ones (poweredge 1750, dual xeon w/ 3x73 gb scsi raid 5, dual ps, etc).

The other bad thing about dedicated servers.. if you have a 'spam problem' or 'other issue' (whether true or not, and even the best hosts run across a spam problem once in a while).. you may get your machine shut down / formatted.. atleast if you colo they will just kill the ethernet and you can ship the machine somewhere else.. that way your data is still intact.

[THW-Dave]

If your physically local, and you have 24.7 access, it sure saves you alot of time talking to an admin that could care less about your bargin basement dedicated server.

[AKavanaugh]

Colocation shows its true advantage when you actually run a legit business (IE. file taxes/expenses/get audited).

With corporate tax being so murderous, you want to come close to break even on expenses/revenue depending on what bracket you fall into. By doing colo, you can lease a server, this adding the lease to your expenses, the colo fee to your expenses, added together with salary's, you'd get hit up for less corporate tax while adding over all value to your company as you would actually own equipment (equity).

And if you ever sell out, you have more to sell, more return to your investment, once again, pure equity.

[eddy2099]

I am not sure about the laws in the US but wouldn't a dedicated server be also considered a business expenditure and thus lower the taxible income too ? So what is the difference between colo and dedicated in this case since you are leasing the item ?

And also if you are looking at owning the item making it part of your asset group, wouldn't it also be subjected to depreciation / amortization just let any asset ?, ie drop in true value over the taxation year ? Wouldn't there be a period when you cannot claim anymore, ie with it is fully depreciated ?

With a dedicated server, you pay the fees as long as you have the server and that becomes an expense.

From what I understand, a true lease is like dedicated hosting, you do not own the machine. So at which time, it is just a business expenses during the lease period and you cannot claim it as your asset since it belongs to the lessor and not the lessee.

Of course, I know that some lease contract allows you to pay the machine at the end of the lease for $1 and at which time, when you make the purchase it becomes your asset but reflected on the books, it would be $1.

Dedicated server hosting is the same except you do not own the machine at the end but usually are not tied in to a long term contract or financial commitment if you do not need the product.

I guess the advantage of Colo is you get to choose the hardware and that is probably about it.

Unless I am looking it the wrong way ?

[JustinH]

Originally posted by eddy2099
I am not sure about the laws in the US but wouldn't a dedicated server be also considered a business expenditure and thus lower the taxible income too ? So what is the difference between colo and dedicated in this case since you are leasing the item ?

See, that's where things get tricky. You're not actually leasing a dedicated server, you're renting it. Since leasing in terms of tax laws, means ownership or eventual ownership.

And also if you are looking at owning the item making it part of your asset group, wouldn't it also be subjected to depreciation / amortization just let any asset ?, ie drop in true value over the taxation year ? Wouldn't there be a period when you cannot claim anymore, ie with it is fully depreciated ?

Yep, but you figure you'll end up replacing the server about the time that it's fully depreciated, unless you're buying really high-end hardware. When I was working for a colo company, they leased machines on a 12-24 month lease period, then sold it when the lease was up. This way, the servers never reached full depreciation.

Dedicated server hosting is the same except you do not own the machine at the end but usually are not tied in to a long term contract or financial commitment if you do not need the product.

I guess the advantage of Colo is you get to choose the hardware and that is probably about it.

Unless I am looking it the wrong way ?

In the end I guess it depends on how big your company is. Not to mention, I wouldn't be coloing Celeron's, but you could actually save some serious money if you have a Full Cabinet of Dual-Xeons. In most situations, that would probably be cheaper then having 42 Dual-Xeon dedicated servers.

[pmabraham]

Greetings:

Co-location puts you in charge of the infrastructure within your co-location area.

If you want to install your own network attached storage (NAS) device to backup one or more servers data, you can do so.

If you want to install your own firewall and router hardware, you can do so.

If you want to set up a virtual local area network (VLAN) so that traffic between machines is faster and does not count towards bandwidth, you can do so.

The list goes on and on.

The money saved depends on what you use for comparative purposes.

If you are comparing co-location to the Rackshack.net’s of the world, then co-location may only make sense with a number of machines (quarter rack or more) whose overall bandwidth usage combined is relatively less than a comparative number of Rackshack.net machines given low rack price and going with “don’t you dare depend on it” Cogent-only bandwidth.

However, if your comparison is against companies like Rackspace.com, NTT/Verio, Digex, and the like, then co-location can save you a lot of money.

Now, why co-locate if you can go with the Rackshack.net’s and save an incredible amount of money?

Well, for one, you can only use their equipment which has no repair, replacement, or uptime guarantee. So if you don’t mind being under the control of their infrastructure with no guarantees for service, then save money which may be lost along with your house etc. if you are in a business where your customer cares about up time.

Thank you.

[eddy2099]

I guess in the end it probably boils down to control.

With Colo, technically you will have control over the hardware configuration (not necessarily cost) because you decide what kind of components go into the server. I believe most dedicated servers are whitebox system and probably very basic components.

Cost perhaps when you have a number of servers and could host within your own rack or cage when you spread the bandwidth within all your servers but probably not with colo places which markets per unit (1U or 4U space).

Also if the datacenter allows you or your technicians access to the servers, cage or whatever then you could do what you need locally. There are however those places which do not permit you in for one reason or another..

I guess it depends. If you are doing small number of systems and you know you will outgrow your needs or physically too far from your servers or do not have the necessary technical knowledge to manage the server (hardware and software) then Dedicated is for you.

[JustinH]

Originally posted by eddy2099
I guess in the end it probably boils down to control.

With Colo, technically you will have control over the hardware configuration (not necessarily cost) because you decide what kind of components go into the server. I believe most dedicated servers are whitebox system and probably very basic components.

Cost perhaps when you have a number of servers and could host within your own rack or cage when you spread the bandwidth within all your servers but probably not with colo places which markets per unit (1U or 4U space).

Also if the datacenter allows you or your technicians access to the servers, cage or whatever then you could do what you need locally. There are however those places which do not permit you in for one reason or another..

I guess it depends. If you are doing small number of systems and you know you will outgrow your needs or physically too far from your servers or do not have the necessary technical knowledge to manage the server (hardware and software) then Dedicated is for you.

I agree Eddy, however, I don't think I'd ever use a datacenter that wouldn't give me access to my hardware. That would totally ruin the major advantage of colocation. I guess if you are worried about unintellegent sys admins, you may want to colocate for the very reason you were talking about: control.

[WII-Aaron]

It's somewhat unrealistic to compare dedicated servers to colocation. They are two seperate products for two seperate classes of customers. It's like comparing shared hosting to a dedicted server.

Colocation is for people who have outgrown thier dedicated servers. It's the next step up.

Dedicated servers are cheaper and less hassle in the short term. One to five server companies should have dedicated boxes.

Once you're past that point though colocation is the best way to go. Yes, there's the added upfront expense of the machines but a rack will cost you $500 a month and then bandwidth will run you a little more. If you manage it right you'll end up spending less then half what you'd be paying monthly for the same capacity in dedicated servers.

Aaron

[johnallen]

Colocation defintely gives you more opportunity to grow.