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  1. #1
    Join Date
    Sep 2002
    the netherlands

    Question dedicated vs. colocated

    hey all,

    I'm new here. I'm currently using a reseller package from my hosting provider but I'm thinking of taking the next step.

    so I am currently considering the two options I have: getting a dedicated server or buying my own server and colocating that.

    now I know all the standard pro's and cons for both, but I am looking for people with experience that can tell me some of the hidden, lesser known pro's and cons.


  2. #2

    The choices may be better stated as co-location vs. dedicated vs. managed dedicated (beware of the term managed).

    Co-location is where you supply all or most (usually all) of the equipment necessary to host your operation. You place that equipment (via direct shipping from manufacturer, shipping from you, or in-person) in an area that you rent from the co-location facility.

    The co-location facility typically supplies you with three P's --- ping, power, and pipe. Ping (not to be confused with the ping network utility) means they supply with with connectivity to their network. Power means just that -- they power your boxes with electricity. Pipe means how much / fast a connection you rent from them (please note it can also mean the size of their network pipe and from whom -- such as Cable & Wireless with BGP4 and UUNet).

    In most co-location situations, you are completely responsible for maintaining your own equipment; and, for insuring your equipment.

    The data center providing co-location manages their network; you manage your equipment.

    Co-location terminology (not meant to be complete)

    Burstable - Is your bandwidth (data traffic) per second or month fixed (capped) or can you burst (go higher)?

    Burstable will allow you to go higher (have more than what you've contracted to purchase) which means no lag of network speed. Non-burstable generally means you connection is slower during the time where bursting would be nice to have available.

    MBps (Megabytes per second) and KBps (Kilobytes per second) - a measure of bandwidth (data traffic) per second.

    Ping, Power, and Pipe (the three P's) - often used to describe the meat and potatoes of co- location. Ping means network connectivity to the Internet. Power means electricity to the devices. Pipe means how much bandwidth (data traffic) is being provided.

    Rack - A cabinet (can be open or locked; opened means anything from no door to just no key) which holds rack mountable servers. A standard rack can hold 42 rack units.

    Rack Unit (RU) - A unit of rack space measured as being 1.75 inches high.

    Hidden costs of co-location

    If you remember that the equipment you are placing at the co-location facility is YOUR equipment, then most of the hidden costs should make sense to you.

    * You are responsible for maintaining your equipment.
    This not only means the software on the machine, but it also means the hardware.

    So if the hard drive fails, do not expect the co- location provider to have a spare in stock unless you've made arrangements before the failure took place.

    *You are responsible for insuring your equipment.

    Generally the insurance runs 1% on the dollar; so don't let the statement frighten you.

    * If you ask for burstable bandwidth, be prepared to pay hefty overage charges if you do burst.

    Let's say you are paying approximately $2.00 to $2.50 per GB of data traffic; and, that you've contracted for 64 KBps (which is 20 GB per month).

    Now you burst to 25 GB one month; then you can expect to pay as high as $5 (sometimes more) per GB of overage.

    * Whether you decide to physically visit the data center to make repairs or updates, or you have the data center staff do the work for you, expect to pay the data center.

    That's correct, even if you are doing the work, you may have to pay the data center a fee for their staff to watch you for security reasons as it relates to the data center itself and other customers housed in the data center.

    Co-location cost savings

    Co-location, when done correctly, can save you thousands to hundreds of thousands of dollars per year in hosting fees.

    How is this possible?

    Well when you contract for a dedicated server, you are basically doing the equivalent of renting an apartment instead of buying a house.

    Under normal circumstances when you rent an apartment, the apartment is never paid off. You keep making the same monthly payment (or more over time), and there is never a time when the payments stop.

    The same is true for dedicated servers. While a part of your monthly fee goes to paying off the equipment you are using, you will never own the equipment.

    And because you are not the owner of the equipment, and the provider is renting you the equipment as part of the over all services, your payments will never go down.

    Depending on the type of hardware you need for your solution, the hardware portion you are paying to the provider to rent their hardware can range anywhere from a hundred and change per month to several thousand per month. That adds up over time.


    Dedicated servers is where the data center purchases all of the equipment you need for your solution, and then rents / contracts that equipment to you.

    It is important to note that you will never own the equipment in a dedicated and managed dedicated situation. This is like renting an apartment; you never own the apartment.

    Typically the data center providing dedicated servers is responsible for managing their network and the physical hardware they are providing for your use; you are typically responsible for providing the day-to-day management of your equipment in terms of system / server administration.

    Where as in co-location most bandwidth is sold based on speed per second, dedicated and managed dedicated solutions typically sell bandwidth in quanity per month.

    This allows for more fixed costs even when overages occur.

    Typically dedicated servers make the most sense when you don't have the ability to manage the physical equipment or if ownership of the equipment is not necessary.

    Given that the typical rule for Mean Time Before Failure (MTBF) results in servers being replaced every three to five years, owning equipment puts the burden of replacing and upgrading in your hands.


    Managed dedicated servers can have many meanings. In the past it meant that the data center took care of everything for you with any additional fees period (or if there were additional fees, they would be clearly defined, a rarity, etc.).

    Today, a managed dedicated server can mean you have a browser-based control panel where YOU handle the management.

    Yes, that's a complete joke.... they call it managed because YOU do the management <sigh>.

    And there are companies who provide no more than dedicated servers (they manage the network and the physical hardware) who call themselves managed; and, you get nothing more other than the "word."

    It is like getting a promotion and new title without any change of compensation.

    So in the realm of managed hosting, you must be completely on guard; you must ask a ton of questions.


    I hope this gives you a start.

    Take care, and thank you.
    Peter M. Abraham
    LinkedIn Profile

  3. #3
    Join Date
    Oct 2001
    Toronto Canada
    Brilliant dynamicnet

    I didn't even ask the question lol but I found it an interesting and educational read.
    For a great new forum please click on my weblink.

  4. #4

  5. #5
    Join Date
    Sep 2002
    the netherlands
    wow, thanks dynamicnet. thanks for the awesome reply.

    now I'm thinking of this (dedicated/colocated) server for my hosting business. would it make sense to buy my own server for that, even though my clients will still pay the same amount of money monthly whether it's my own server or not?

    in the end it will of course save me money to buy my own server, but then again when the server dies I will have to replace it, and when I go dedicated the provider of the server will have to replace it without any cost for me.

    hmm.. it's hard to make this decision. very hard.

  6. #6

    Starting out

    I would personally not start out buying my own server and colocating. Better to have the data center using servers they are familiar with and can support-those they have or can quickly get parts for. Unless you have your own data center or at least your own personnel on site, you will have to depend on others for hardware issues. In my opinion, better that they own the hardware.

  7. #7

    Co-location or dedicated or managed depends on how much involvement and skills you have to place.

    If you can manage the hardware and software including operationg system, then co-location can save a ton of money.

    Once your hardware is paid off your payments go down, while your clients pay the same monthly.

    Thank you.
    Peter M. Abraham
    LinkedIn Profile

  8. #8

    dynamicnet: Your lengthy post was really insightful and interesting to read. I was particularly enlightend of this fact :

    Today, a managed dedicated server can mean you have a browser-based control panel where YOU handle the management.

    But, i wonder such companies who by just offering a browser based control panel for managing the server charge ??

    Are their charges similiar to the ones who really do managing the dedicated server or much lesser than that.

    I feel the prices should be somewhere between unmanaged dedicated and managed (In a true sense ) dedicated server, right ??

    Any input ??

  9. #9
    Greetings Brands:

    Those companies that put a browser-based control panel on the server, and call themselves managed hosting providers typically charge dedicated server prices.

    They don't typically charge the fees necessary to provide real and meaningful management of the box.

    Thank you.
    Peter M. Abraham
    LinkedIn Profile

  10. #10

    Thumbs up Great Post Dynamicnet

    What a great post Dynamicnet, being new at this I found it highly educational and very well thought out. Thanks for taking the time to share such detailed information with all of us!

  11. #11
    Join Date
    Jun 2002
    TO, Ontario, Canada
    MMemmer I agree! Thanks for the great insight to colo and dedicated. Perhaps you could email hostingviews or another site and they would post it

    If I ran a hosting information site I certainly would.


  12. #12
    Join Date
    Sep 2002
    the netherlands
    right. considering all the information I have retrieved from various sources but mainly from the above posts, I have come to the conclusion that to start my business correctly I will go dedicated at first. if that works out alright and I get enough customers, then I can always move to my own server.

    thanks to everyone who responded.

  13. #13
    Join Date
    Jul 2002
    Orlando Florida
    Well if you know what your doing Colo I think is cheaper. You can build yoru dream machine for under 450 bucks if you buy the parts wholesale and build the system yourself. WWW.TCWO.COM has very good prices. (even better for me since they are right nextdoor to me so i dont pay shipping cost). I can build me a AMD 1900 for only about $380. Most setup cost are about 200 alone! Colo with the right places can cost 75 or so a month. Good thing is the server is fully yours. You can do as you please with it and add whatever you want to it (only legal stuff though). Most dedicated servers wont allow that. They are the kind give you limited access to the server and your paying 250 bucks a month for only 40gigs of space. Like i said you can fill your server up with serveral 120gb hard drives and still pay the same amount montly. But you also have to remember buying cpanel and whm and ensim or any other cp you want cost money and then have to put win2k or redhat or somethign on there too.... Intial setup fees can run high and if you dont have much to spare dedicated is teh way to go to see if you will become sucessful in the hosting biz. I know a few years back I almost poored out alot of money on getting a bunch of colo stuff but then decided to try my grounds on dedicated. I ended up not making enough money for it to be worth while and i shut down.

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