Colocation hosting relates to a hosting solution wherein you are the owner of the server that is being used to host your website but the server is connected to the Internet by your hosting provider by using their internal data center. What this means is that in case of a colocation hosting plan, you purchase the server that would be used to host your website, configure it according to your needs and either drop it off or mail it to your hosting provider who sets up the server in their data center and offers you access to it via the Internet.
The need for colocation hosting plans arose when certain webmasters thought of supporting applications which were too specific to be run on the hardware that is offered by most traditional hosting providers. These applications required the use of custom hardware but no hosting provider offered such an option; plus the option of hosting the custom hardware themselves proved to be a challenge in itself. So hosting providers came up with a solution wherein you would buy the custom hardware, configure and send it to them to be hosted in their data centers.
But is it worth making use of a colocation hosting plan for your website? Well, the answer to this question is both yes and no. Yes, if you want to offer an experience that is unmatched or are running something that requires custom hardware you have only two options either setup your own in house data center with custom hardware running your website or make use of a colocation hosting plan. And no, in case you do not have the kind of money that is required to purchase custom server hardware and can make do with a little bit of customization to a traditional hosting plan.
Making use of a colocation plan only makes sense in cases where in the hardware being offered by a traditional hosting provider is not capable of supporting the kind of applications or website that you are going to run or in cases where making use of a traditional plan would lead to inefficiencies in the running of your website leading to loss of visitor interest or additional expenses due to excessive resource usage. In most cases colocation plans are used by organizations planning to run certain business applications online or looking to offer a custom interface that offers excellent user interaction. For those simply running into resource troubles on traditional web hosting plans a virtual private server (VPS) might be the best option. If a VPS isn’t enough then a dedicated server is the next step up.
The reason for this restrictive use of colocation hosting is the cost associated with buying the hardware that would be sent to the hosting provider. Since custom hardware is costly, running a colocation plan might not be suited to several types of organizations or individuals. Also, such a hosting plan requires use of additional services such as hardware maintenance services, etc. for which some extra amount of money would have to be paid in comparison to a traditional plan. And then there is the issue of replacement of the hardware in case of a hardware failure; something that is taken care of by the host in case of a traditional hosting plan.
Thus it can be very clearly seen that colocation hosting solutions should be used only by those organizations or individuals who need to run custom applications that cannot be run on traditional hosting plans or by those who want to rise above the competition and offer a user experience that is unmatched by any other competitor in the market, thus carving a whole new segment for themselves in the online market.