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  1. #1

    Why is co-locating so expensive?

    Why is co-locating a server more expensive in most cases than leasing a dedicated one? I'm currently leasing 4 dedicated servers at $90 a month each. They include 300GB of bandwidth - each. $90 a month. In my search to co-locate some of my own servers, I'm trying to find co-located services that offer 300GB of bandwidth a month and it's like $300-$400 a month. Outrageous.

    Why is it so much more when the co-locating company doesn't even have the investment of a computer involved?

  2. #2
    Join Date
    Aug 2002
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    UK
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    It's a simplistic answer, but /most/ colo isn't oversold, and colo customers are much more likely to use the full amount of resources on their account.
    Robin Balen
    Gyron Internet Ltd - http://gyron.net/
    UK colocation, managed hosting and connectivity services with 100% uptime SLAs

  3. #3
    What kind of case are you using for your colo? With colo rackmount is a must and the smaller the better. There are plenty of deals out there for 1u with bandwidth and power for $50-75/month.

  4. #4
    Also Colocation is niche specific andthere are typically more savvy technicians who would colocate their servers. These users would typically run more complex applications and want to have uninhibited access to their servers.

    Hosting companies bank on the fact that low end dedicated server users won't use all their resources and are essentially running a virtual private box.

  5. #5
    While I agree that many colo customers utilize a higher percent, there is much more to it. Colocation is much harder to do network planning for. With dedicated, a provider installs many servers that are exactly alike at one time. This makes install easier than with colocation where you have many different types and sizes of servers.

    When you are comparing the prices also compare your costs for upgrades. With colo you can always put in bigger drives, max out the memory, or even swap out the server. Most people just look at the base server price and try to compare.

    While I agree there is a difference in costs, I think the main reason for the price difference is the amount of competition. There arenít a lot of 30,000 sf datacenters out there chasing single server colocation. Most are focused 100% on the dedicated servers.
    Looking for next opportunity

  6. #6
    Join Date
    Jul 2003
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    468
    Dedicated server offerings simply do not have enough badnwidth for me to cost affectively use them. I'd have to buy 5-20 dedicated servers per single colo machine we use for stream hosting -- many of our machines push upwards of 100Mbits/sec each week day.

    I also need physical access to the machines, and the ability to create my own network and make cross connections to other racks for setting up stuff like hot spare failover. None of this is possible with any dedi providers I have found.

    For a company that offers only web hosting / reseller packages without hot spare redundancy, dedicated servers are a good way to get your foot in the door.
    Last edited by amps; 12-14-2004 at 07:19 PM.
    bye

  7. #7

    colocation vs dedicated

    dedicated is definitely cheaper on a per machine comparison, but once you hit a certain number of machines, colocation becomes cheaper.

    IE..for 10 dedicated servers, you may pay $1000/month, which (in my shopping) is comparible to getting a full rack with a minimal amount of bandwidth.

    for 25 servers, you are maybe paying $2500/month for dedicated whereas colo you could may be able to get away for $1500/month ($750 for rack, the rest for bandwidth and power)

    For us, it was a volume deal that makes it cheaper. We have 16 servers, so the time to move from dedicated to colo is now. That and we got tired of paying an extra monthly fees for hardware upgrades (memory, storage, etc). we'd rather buy the upgrade and be done with it.

    In the case of a large service provider with 500+ machines, the cost difference is clear--colo hands down.

    In the case of a company web/email server, dedicated is way cheaper.

    But then again, you have the oddball guys who want to run wierd network setups (in which case colo is pretty much the only choice)

  8. #8
    Join Date
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    OK, colo does not really make sense for a small number of servers, unless you have a specific setup you cannot achieve via dedicated servers. Let me get an example here.

    Say you get 10 dedicated servers at $100 a month, you want a simple 512mb RAM upgrade in each and that ups your price to $125 each, that is $1250 a month. In exchange, you can get those 10 servers in a quarter rack for say $350 and then say $750 for 10mbit/sec of bandwidth, when spread across 10 normal dedicated boxes that should be enough and you're looking at saving $150 a month. You'd still need to buy the boxes, of course, but that is about the lower end of the colo spectrum, if you realize you only need 5mbit/sec, you save even more money.

    Colocation is just much more flexible and lets you take advantage of the economies of scale. You only commit to the bandwidth you actually need and then get lower prices per mbit/sec when you increase your commitment level.
    Karl Zimmerman - Steadfast: Managed Dedicated Servers and Premium Colocation
    karl @ steadfast.net - Sales/Support: 312-602-2689
    Cloud Hosting, Managed Dedicated Servers, Chicago Colocation, and New Jersey Colocation
    Now Open in New Jersey! - Contact us for New Jersey colocation or dedicated servers

  9. #9
    Join Date
    Jun 2001
    Posts
    596
    Exactly like how Karl put it....colo is much more flexible. In long term, when you colo a completely loaded colo server (i mean really loaded), its more economical.

    The only thing I really hate about colo is when we have to UPS or courier the server to the data center. We have to always buy a large amount of insurance. (its too bad there arent too many super large networks and economical networks over in toronto)

  10. #10
    Join Date
    Apr 2001
    Posts
    542
    That's an unfair blanket statement.  More precisely, if you need control over the hardware and software configuration of your server, need non-cookie cutter setups, need additional specialized hardware, or simply want the peace of mind of owning your hardware so you can move it anywhere you choose, then colo, even for a single server, is the appropriate choice.

    Choosing between colo and dedicated servers is not just about price.  If you only base it on price then you are probably making a one-dimensional decision and with the low-end of the dedicated server market very competitive (due to the revolution in pricing pioneered by EV1 and all their competitors), colo will always seem more expensive.

    With our clients, we find "plain vanilla" hosting customers prefer shared hosting or dedicated servers; developers, programmers, startups prefer the finer control they have by provisioning their own equipment and co-locating it.

    Typical example - client has "dirt cheap" web servers but built super-reliable database server/cluster configuration with multiple Dell machines.

     

    Originally posted by KarlZimmer
    OK, colo does not really make sense for a small number of servers, unless you have a specific setup you cannot achieve via dedicated servers. Let me get an example here.... 
    Voicegateway.com Web Services - High-performance Hosting & Fully Managed Servers
    Specializing in Virtual Machine Hosting with Microsoft Virtual Server 2005 R2, Windows SharePoint Services, Microsoft SQL Server 2005, ASP.NET 2.0 hosting and Newsletter/Mailing list services

  11. #11
    Join Date
    Mar 2004
    Location
    Singapore
    Posts
    6,969
    Beats me why colo is more expensive too in the USA, in Singapore colo is definitely cheaper. In USA, I can get a dedicated server with 2000 GB / mth for US$69 , colo for 1 U cost US$59 with 200 GB/mth bandwidth, really doesnt make since, considering for dedicated server, the company still needs to spend money on the hardware and maintenance.

  12. #12
    Join Date
    Apr 2001
    Posts
    542
    Dedicated server providers oversell - they assume (correctly) that the majority of their clients will not use all the bandwidth included so they can include large bandwidth allotments with dedicated servers to be competitive with everyone else.

    On the other hand, colo providers are more conservative/quality oriented.  The vast majority will underprovision.  The total bandwidth going into their building/datacenter/cage/rack is greater than the sum of the bandwidth they've sold to each colo client.

    Dedicated server providers are also using rock-bottom cheap equipment.  The bigger guys all use unbranded tower/home-pc style systems that are not designed for colo use so their hardware cost is much less than one might initially assume.

    Thus cheap hardware + cheap/oversold bandwidth allows the dedicated server pricing to be very aggressive.

    Note:  Need a comparsion?  Look at quality dedicated servers from Rackspace or Verio or other reputable, more traditional non-kiddie client dedicated server providers and you will not see $59 servers or prices lower than colo.
    Voicegateway.com Web Services - High-performance Hosting & Fully Managed Servers
    Specializing in Virtual Machine Hosting with Microsoft Virtual Server 2005 R2, Windows SharePoint Services, Microsoft SQL Server 2005, ASP.NET 2.0 hosting and Newsletter/Mailing list services

  13. #13
    Join Date
    Jan 2003
    Location
    Chicago, IL
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    6,797
    Originally posted by spiv
    That's an unfair blanket statement.  More precisely, if you need control over the hardware and software configuration of your server, need non-cookie cutter setups, need additional specialized hardware, or simply want the peace of mind of owning your hardware so you can move it anywhere you choose, then colo, even for a single server, is the appropriate choice.

    Choosing between colo and dedicated servers is not just about price.  If you only base it on price then you are probably making a one-dimensional decision and with the low-end of the dedicated server market very competitive (due to the revolution in pricing pioneered by EV1 and all their competitors), colo will always seem more expensive.

    With our clients, we find "plain vanilla" hosting customers prefer shared hosting or dedicated servers; developers, programmers, startups prefer the finer control they have by provisioning their own equipment and co-locating it.

    Typical example - client has "dirt cheap" web servers but built super-reliable database server/cluster configuration with multiple Dell machines.

     
    The example you used is exactly the type of setup I was talking about. Any type of setup you cannot achieve from a standard dedicated server offering is when colo is recommended. This may involve hardware, software, or clustering requirements. Not really seeing what you're disagreeing with,
    Karl Zimmerman - Steadfast: Managed Dedicated Servers and Premium Colocation
    karl @ steadfast.net - Sales/Support: 312-602-2689
    Cloud Hosting, Managed Dedicated Servers, Chicago Colocation, and New Jersey Colocation
    Now Open in New Jersey! - Contact us for New Jersey colocation or dedicated servers

  14. #14
    Keep in mind with you dedicated servers normally you never get to touch or see the server. You have to do everything from remote. That means the company does not have to pay someone to screen you, or issue keycards or any of the rest of that. Also when you colocte and get a rack with say 5Mbps of bandwidth the likelyhood your going to use that is great, however these cheap 99$ a month server rental place are betting that less then 1/4 of their customers will use the bandwidth they offer, and in all likelyhood that dedicated server provided is just colocated somewhere with a rack of box's making money off the economeys of scale.

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