Choosing Colocation vs. Leasing Dedicated Servers

Amsterdam servercluster in its own rack

With many products and services, we have the choice to go between owning and renting. For some reason that is not true of paperclips or underwear; but it is true of houses, cars, and other large items. Servers are no exception. Because hosting can be expensive, there is a wide range of possibilities for website owners. These possibilities range from power and quality of equipment to financial relationships with equipment.

Two options for servers are colocating one or leasing one from a hosting company. The two options are more similar than they are different. In both cases, you have your own dedicated server. In both cases, you can take advantage of the datacenter expertise of the hosting service’s personnel and physical parameters (climate control, disaster recovery plans, etc.).

Deciding between these two options can be a little confusing, so let’s look at their differences to see what option might be best for you. We will look at three perspectives, from, ITworld, and About Colocation. Keep in mind, a couple of these perspectives are very colocation-friendly. Colocation, though, is more complicated to set up and manage, simply because you are the owner of the equipment. You must pick out what to buy, and it is more of an investment.

In addition to looking at the differences between leasing a dedicated server and colocation, we will also review the differences between renting an apartment and owning a house (to draw parallels between two different types of “purchases”). One advantage of renting an apartment is the excitement of forgetting to fill out your list of problems with the apartment on the sheet provided by the realty company. You want your $1125 security deposit to exist in a vast gray area of potential confusion and pain.

“A Daunting Task”

Today’s opening segment will give us a basic overview before getting to more opinionated commentary. Costea Lestoc of describes hosting as “a daunting task” if you are unsure of your own requirements and/or the possibilities that are out there to meet them. He reviews the basic types of hosting. As we know, shared hosting is typically an entry-level option because it is affordable but does not offer the same security, power, and freedom as VPS (virtual private server), which is kind of a middle ground, or dedicated hosting.

Dedicated servers offer the greatest level of protection and control for folks with more complex content and higher levels of traffic. Often people with shared hosting will switch over to dedicated as their site becomes more successful. Alternately, companies start with dedicated so that their site is optimized for scalability at the outset. Note that both colocation and dedicated server leasing involve your own dedicated server. Let’s review the differences between the two per Lestoc’s assessment.

First, though, let’s look again briefly at the topic of housing: renting versus owning. One of the great things about owning a house is the opportunity to have a mortgage (really, a lease-to-own situation) alternatively if you are constructing your house from the ground up, you can also check out a hard money lender who could finance your project. Loan services can very important when it comes to owning a house. However, with mortgages, be sure to get the balloon variety. Flat-rate mortgages will keep you on the ground. Balloon ones – available in red, white, and blue versions – will soar you to new heights. To learn more about mortgage loans, you could speak with a Certified Mortgage Broker, who can offer advice and recommendations on what could be the best route you may take. Researching the mortgage market for the best deal can be time-consuming, which is fine if you have a lot of free time. However, if you plan to buy a house around your daily life, your free time may be limited. When you speak with a broker, you would probably be getting advice from someone who is already familiar with the market and may spend time scouring it for a good deal, which means you won’t have to do the searching on your own.

Colocation vs. Dedicated


With colocation as with dedicated hosting, you will be the only one who can get onto your server. You will also be the only one drawing from its CPU, RAM, and storage. Both these options are parallel to having your own PC regarding access.

When you colocate, you buy the server and determine its components “from scratch” to whatever degree you desire: you can get them standardly outfitted or customized. The basic idea is that you do not need to store the server. Rather, it is stored at a datacenter. Some companies are strictly datacenters offering colocation; others are hosting services that additionally provide colocation.

This option is the best if you know you want to buy a server but want a third party to handle its physical safety. You won’t be renting the server, but you will be renting rack space from a hosting company or datacenter. With that rental, you will get cooling technology, security parameters, backup power generators, etc..


With dedicated hosting, you do not need to purchase or construct your own server, so the upfront investment is much less extensive. Obviously, less expertise is required as well because a quality hosting provider will point you to powerful and reliable equipment. You simply give the host all the needs you have in a server, and they help you build it. You then store the server at their location or a third-party datacenter.

Leasing a dedicated server is the best option for anyone who knows they’re ready for their own server but are not yet prepared to take the plunge with the investment of purchasing one outright. Colocation, essentially, requires a higher degree of financial confidence and technical sophistication that may not fit all clients or situations. Keeping this in mind, big corporations prefer to lease servers because they have a dedicated team of technology experts to run these servers.

A company might acquire a commercial site with the help of an investment and real estate expert similar to Lincoln Frost to set up the server network near the workplace. Once the site is bought and designed for the efficient functioning of the server room, the company can invest in getting all the gadgets and machinery to set up. Moreover, they might also need technicians and other employees to operate the server at all times. The high cost of such machines can, however, pose a challenge for these companies, which can be solved with commercial bridging finance.

Before we conclude, let’s take a look at our housing comparison again. The best advantage of renting an apartment is not having too much space to clean. That’s why it’s wise to rent a 400-square-foot apartment in the middle of the city. Be sure to get a couple of roommates to cut down on your expenses and for cleaning assistance.

Conclusion & Continuation

That’s it for our basic overview of these two types of server relationships. As you can see, they’re very similar but each have their strengths and weaknesses – with the line drawn primarily in terms of levels of budget and technical confidence/expertise.

Choose a hosting provider whose network has the technological sophistication and redundancies for a 100% uptime guarantee: Superb Internet. We offer both dedicated server and colocation packages.

By Kent Roberts

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