Colocation is a type of Internet hosting, often used by small businesses. It is a type of hosting that is useful for a company who wants something more than basic web hosting from a web hosting company, but doesn't have the requirements for hosting their own server.
Many web hosting companies offer rack space for colocation. Colocation works by hosting companies renting out this rack space within their data centres for other businesses to place their servers. These businesses will buy their own server, which they will configure and alter when necessary. This will then be placed in the rack space they have bought from the hosting company. The hosting company isn't actually involved with the server in any way; they just own the rack space which they rent out to businesses to do with as they please. This means that the business owns the server just as they would if they had the server at their own site, but they use certain resources provided by the hosting company.
The hosting company will provide the bandwidth, power and the right air and temperature conditions for the server to operate in. Responsibilities with regards to the server are completely in the hand of the business that owns it. Whenever maintenance needs to be done, the business that owns the server will have to go to the data centre and do this themselves.
Businesses that get the greatest benefit from colocation are those than need to run their own website, email and perhaps a database, while keeping complete control.
They will not have to rely on a hosting company; if they need something doing they just do it themselves. Colocation is a type of hosting that has increased fairly rapidly over the last few years. As more businesses have the demand for extra needs on top of basic web hosting, colocation is a good alternative to hosting their own server. Colocation is more expensive than web hosting, but can be significantly cheaper than some of the other options.
With colocation a business runs its own server. This gives them much more control over their server, and has many of the same strengths of hosting the server themselves. There is a lot less work and expertise needed though. This saves them both time and money. A disadvantage is that if something goes wrong or needs changing, they will have to do it themselves.
Colocation has many benefits over other types of hosting. If a business needs more control over their hosting than they currently have but does not want to host their own server, then colocation is one of the alternatives.
source: Andrew Marshall
Colocation
What is Colocation?
SUGENG,What Should I Be Paying for Web Hosting Services?
SUGENG,That's a good question: what should you be paying for your web hosting services? Surfing online you will see many price quotes anywhere from $2 a month to over $200 a month for web hosting services. There's no easy way to answer whether or not your service is worth it or not, except to say that if your hosting services helps you earn money, then you have made the right choice.
Some website hosting services may only charge a few dollars a month. If they can promise 99.9% reliability and a 24-7 customer support staff, then the cost for the service will be justified. On the other hand, if you invest in a dedicated server packaging plan, you may find yourself spending hundreds of dollars a month and struggling to maintain a cash flow. Dedicated servers are ideal for high traffic, heavy online commerce sites. Promotional sites or link sites may not merit the full cost of a dedicated server.
Another pressing question is whether or not you should pay for your web hosting services at all. Some sites offer free webhosting plans, and may even offer to get rid of the banners. If you want to cut as many controllable expenses as possible then a free hosting plan may be more practical than a low-cost plan with recurring charges. (Especially considering that many of these low cost companies charge large setup fees or make you prepay for three years)
Free services do have limitations. Not only do some services force you to put advertising banners on your site, but you may also have to endure more downtime, poor customer support (and probably no live support via telephone) limited space and bandwidth, restrictions as to what you can advertise on your site, no secure server access and file type restrictions. Some free sites also do not allow for your own custom domain name, but force you to take an unusually long homepage address like http://www.AFreeWebHostCompanyService.com/Area31/Remains/2310/YourPage/ Index.htm. (Kind of hard to brand!)
Whatever you choose, your logic should have a good sense of business, cash flow and expenses. Whatever you spend on web hosting should be replaced with income from online sales or sales traceable to website promotion. (Web statistics could tell you this) Web hosting is a lot of fun but if you're not careful, it could easy lead to a massive amount of debt. For more information on this subject compare popular website hosting packages at free review sites.
source: Leon Belenky
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