Colocation 2.0: What is the Standard for Colocation in 2017?

Colocation 2.0: What is the Standard for Colocation in 2017?

The changing face of Colocation

Hardware colocation services date back as far as the 1980s. Initially, many would market themselves as cheaper alternatives to other options like dedicated hosting and later cloud hosting. However, in the modern era, colocation has become more than just a cost cutter and is bought for its added value to the buyer.

Like many services in the technology field, colocation is taking advantage of new and old resources to improve the colocation experience. In this article, we will examine the most recent trends in the colocation market and how new service offerings are attempting to provide greater value to their clients.

Ideally, this will create a template for what a standard colocation provider should be offering in 2017 and beyond. Until recently the colocation market has been highly homogenized, new services offerings have been used as points of difference amongst providers. These offering includes high-density data centers, data center infrastructure for GPU computing, convenient geography, remote hands, hybrid cloud solutions and variety of other solutions. It is likely that in the coming years these new offerings will become uniform and the colocation market will return to a homogenized industry of a higher standard.


What’s Driving this?

Network and content demand growth have fed into the colocation market and the two grow rather harmoniously. Fiber Cross-Connect prices have also maintained a steady pace since the 80s making the demand for network growth increase, which by extension leads to growth in the colocation market.

Much of this has been in response to the increase in the prominence of the cloud. It is no longer enough to save a customer money, colocation now needs to offer equivalent or greater value. Colocation services have changed from the vanilla offering, and in some ways, have become more cloud like in their nature. In addition to assessing the standard for colocation in 2017, we will explore the advances we have seen in colocation and discuss what the future may hold for clients and for future providers.

Before diving into new services, we must first analyze the changing landscape of the colocation market itself.


We Have Seen Changes in….



Colocation pricing tends to be widely varied depending on the nature of the service. However, recent evaluations by TeleGeography suggest the fast-growing European colocation market is on average more expensive than the North American market. However, it is worth noting that when it comes to Fiber-Optic cross-connects North America will charge more while Europe charges more for Ethernet cross-connects. This means that for jobs requiring five or more cross-connections, North America can become the more expensive option of the two. This is because when using multiple cross-connections, as much as 55% of the total cost of ownership will be used in cross-connections. In Europe, this number shouldn’t get much higher than 22%.



The world’s largest colocation service markets are estimated to be New York and London. This is largely a result of cost covering. Real estate expenses in Urban areas can only be offset by large amounts of clients. Proximity to large company headquarters is also a huge advantage. This is also why larger colocation providers in cities like Chicago, New York and other big-name cities tends to be more expensive than smaller providers.

Here are some of the major changes we’ve seen in colocation services in 2017. It is likely this will become the standard for colocation services in the future as the market homogenizes again.


Colocation 2.0 will include…

High Density Data Centers

Thanks to the world of Virtual machines and applications, people can maximize their use of a server.  As a result, power demand has also increased in data centers over the past few years. With modern tools like the NVidia GRID for virtualizing GPUs and gained efficiencies of the modern hypervisor, companies are able to stretch a server to operate at almost full capacity without needing to expand real estate.

As demand for more power more has increased servers have gotten increasingly compact and so one can now fit the equivalent of two rack from 2010 into a single rack with more than 10 Kw of power. This means not only more power, but more cooling to maintain these racks. This is all in the pursuit of minimizing the footprint of a rack and making the whole data center that much more efficient.

This is where colocation really makes a name for itself, many traditional or legacy data centers do not have to capacity to operate at this density. Switching up the layout or internal structure of a data center requires a lot of expertise as well as construction. So, colocation is a means for companies to try to upgrade their infrastructure without a massive down payment. While for many private clouds are a means to this end, colocation gives the user the ability to have the density and the power while still knowing where and how everything is operating.


Geographic Location and the Data Center Experience

With more and more companies experiencing disasters every year, it no longer feels comfortable to have access to a cloud or dedicated Amazon instance that can’t be seen or maintained. For this reason, companies are looking for closer local colocation providers that have high security and flexible visiting schedules. While clouds safety is in its ambiguity, colocations safety is in its concrete accessibility.

It also matters when considering natural disasters and other things that could interfere with a company’s hardware. Geographical colocation is something that colocation providers have been hammering home for quite some time. Recently, they have turned this idea into a primary selling point. This is mostly due in part to the saturation of the colocation market and the wide availability of data centers. Because the growing number of data centers are giving prospective clients more alternatives, clients are able to focus on more granular advantages such as ease of access or local options.

Additionally, because clients are more sensitive to simple (but important) value adds like geography, they are also perceptive of presentation. While still primarily valued for their utility, data centers are becoming more aesthetically appealing all the time.

3D and in person tours of provider’s data centers are becoming more pronounced in the industry, with many data centers having in house kitchens, showers and bedrooms. Similar to the real estate market which depends on friendly in-house tours and flashy marketing, the data center industry needs to nail the physical appeal as well as the technical. While not causative, we have also seen an increase in data center disasters in the past decade. So, make sure that presentation comes after technical proficiency.


GPU Colocation

HPC and GPGPU have bought the GPU into the forefront of business information technology. As such many providers are offering to support these GPUs and have added the necessary power infrastructure to do so. Many companies with focuses in machine learning, big data and computational finance are drawing more on the power of GPUs. Larger companies are investing more time in learning how to monitor and maintain in house GPU servers and accelerators.

Colocation providers are starting to offer packages specific to GPU hardware. High Performance Computing not only makes for expensive hardware, but expensive infrastructure as well. Colocation providers are stepping up their data centers to accommodate modern servers with better air flow, cooling mechanisms and more power. Companies can now build their machine learning computers and then avoid the hustle of cooling and powering.

Providers are also stepping up their knowledge base to provide management services for these devices. Not only will people be able collocate their GPU servers, but they will also be able to purchase remote hands and monitoring for their HPC projects.

Mac Mini Colocation

Colocation has also seemed to have found its way into markets that other more prominent services like cloud and dedicated hosting have missed. The use of Mac minis for development, testing of applications and small business has made a niche for the colocation market and has also made access to Mac environments accessible. This comes as no surprise as Mac Minis are cheaper and smaller than their predecessor the Xserve. In addition to being user friendly and cheap, the Mac Mini has a modest power draw of 13 watts when at idle. A few solid providers have dominated this market rather rapidly because of the low cost to entry and as a result the market runs at a fairly cheap price making life easier on users of mac minis.

Pricing has gotten so cheap, for many companies it is actually cheaper to collocate mac minis than maintaining themselves. This has also gives valuable time back to their IT staff to pursue other technical tasks.


Colocation Disaster Recovery

For many businesses, Colocation is the perfect Plan B in the event of a disaster. Having physical servers backing up important information within reach makes for good disaster recovery.  This is also appealing because it allows for companies to check up and investigate their servers. Only about 25% of businesses in 2015 thought their Disaster Recovery plans were adequate to deal with a real disaster. A colocation recovery plan only requires the physical relocation of the servers, in some cases it’s only a matter of switching networks and you’re up and running again.

As an alternative to outsourcing, colocation gives the client the benefit of having a home away from home as the client still has a good amount of autonomy over their equipment. Many companies prefer outsourcing because it removes many IT responsibilities from their plate, this however comes at the price of control. In order to accommodate as many clients as possible DR providers need to standardize practice. This translates to limiting clients ability to interact with their hardware.

As an alternative to cloud based recovery, colocation makes its name in its simplicity. Cloud recovery requires special software in order to recover effectively, this requires knowledge and special training. As always when something complicated goes array the effects are devastating. This is completely avoided when the only recovery necessary is hardware recovery.


Cyber Security has never been more important

While the physical security of a data center is of the outmost importance to people who wish to house their IT infrastructure, cyber security is becoming more pertinent all the time. It seems every month there is a new form of malware, ransomware or man-in-the-middle attack that reminds us how vulnerable our technology can be. As more IOT devices become available, so does the potential for DDOS networks to form and cyber-attacks. This makes IT equipment seem all the more precarious.

Given the multitude of available IT platforms (Cloud, Dedicated, Colo, etc.) it becomes increasingly difficult to standardize security effectively. Best practices in encryption, cloud security and monitoring are no longer a selling point, this should be where the conversation begins (or ends) with colocation providers.


Remote Hands and DCIM

More than ever servers are becoming more powerful and operating heavier workloads. So it becomes all the more imperative to have skilled hands available if something goes wrong. Colocation providers offer N+1, N+2 and 2N Redundancy in combination with expert staff to keep heavy lifting servers up and running. Additionally, they make the clients hardware easy to monitor and maintain. Remote hands are also including additional services beyond maintenance and are often referred to as Data Center Infrastructure Management (DCIM).

DCIM services allow clients to monitor, configure, optimize and otherwise manage their infrastructure in another data center. The colocation providers managing these services will also be better able to manage their own infrastructure, making colocation as a service better for all. Many providers are investing in on-site engineers, technicians and other certified professionals to improve their remote service quality.


Hybrid Cloud Solutions

Perhaps the biggest sign that colocation is evolving to compete with its alternatives in the industry is the use of Hybrid methods. These methods will support multiple environments for your hardware all at once. These environments remain separate but are accessed through the same channel: The Hardware. This allows many people who are looking for alternatives to cloud to have their cake and eat it to.

As the world of technology grows and the demands of business get more diverse it only makes sense that companies start offering a greater variety of options when it comes to services. Now a company can have a private cloud, collocate their GPU hardware and have dedicated servers all at once! This makes unifying a company’s ITE that much easier and cuts down on segmented IT networks.

This is especially useful for companies using colocation as Disaster Recovery.


Colocation providers made a name for themselves by being the affordable alternative to dedicated server hosting and cloud services. Driven by a combination of growth in network demand and cloud prominence, colocation providers have been adding additional services to remain competitive.

In recent years providers have evolved to become beneficially competitive with the cloud market. In doing so colocation providers greater value to its customers and helps the world of information technology move forward.

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