The colocation data centers have the infrastructure to house network server and hardware of an organization. The hardware is owned by the organization but it is leasing the space from the provider. The server is shared by many other companies and it is mostly a very cost effective solution. This is what makes co-location, another term for colocation, ideal for small companies. Most of the small companies start out with colocation but as their business grows, their requirements change.

With expansion of business, comes the need for more security, more disk space, multiple server requirements and bandwidth and the companies find colocation not a very fulfilling option then. Finally, they reach a point when they feel the need to have their own server. This is where dedicated server hosting solution comes in the picture. Here the organization has better control on the server as it is solely for their use and not shared by any other customers like colocation. The providers own the hardware and give it on lease to the organization depending on their specific requirement.

The colocation and dedicated server hosting are similar in a way that they both take the data centre infrastructure support from the hands of the organization and provide power, connectivity and security to the server.