With the online industry at a halt, ebusiness economists struggle to reduce operational costs for their companies. For those dot coms that thrive on traffic, there is no doubt that efforts have been focused on reducing Web hosting and bandwidth costs. And many have asked themselves “Is co-location cheaper than a dedicated managed server?”
What is Co-Location?
With co-location the Webmaster provides the server, and houses it in a data center or facility that links it to the Internet. Typically, the customer pays a housing fee (called a “rack fee”) in addition to the Internet uplink that runs directly into their server. Dedicated servers, on the other hand, are just that: you have a server dedicated and rented to you, which is managed by the data center or provider, but you do not have absolute ownership over the server.
This is the reason why many favor co-location. After a year of paying a dedicated server, you’ve probably paid the server off 3-4 times over, and yet you have no ownership of the hardware. However, if you don’t expect to have a great deal of traffic, and you’d prefer the additional support that providers give, a dedicated server may just be the right way to go. Owning the server and being responsible for replacement hardware may be an unnecessary cost for your business. In the extremely competitive dedicated server market, you’re looking at $100 (low-end) to $500 per month for a good server. Nevertheless, if you already experience traffic growth and require more resources, possibly even an additional server, I would suggest you consider collocated server(s).
Co-location and dedicated servers compare to buying a home and paying property tax or renting an apartment. Both have their advantages, but they vary according to the situation. The only way to know what you are getting into is to sit down and do the math. Co-location is more expensive at the onset, and cheaper in the long run. Dedicated servers are more expensive in the long run, but cost less up front.