Colocation vs Dedicated Servers – What Is Best for My Business?

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Both dedicated server and colocation are common hosting choices for businesses. In both options, the servers are housed in a highly secured data center of your choice. The main difference between the two is in who owns the hardware. In colocation, businesses purchase their own servers, networking equipment and software and rent rack space or cabinet in an off-site data center to house their server hardware. In contrast, a dedicated server is leased from a hosting provider for your own use.

Pros of Dedicated Servers

Renting a dedicated server from hosting provider means that you do not need to pay any up-front cost for hardware purchase, nor a fee for maintenance or parts replacement. All you need to do is to find a reliable hosting provider with the right dedicated hosting plans to suit your needs. Your hosting provider will handle all hardware upgrade, parts replacement and maintenance. Dedicated servers are either managed or un-managed. If you are hard-pressed for time and lack expertise in server tasks, you can subscribe server management services from your host and get the experts to manage your daily server operations around the clock. Different from colocation, there are no long-term engagements and no headache managing the hardware. You can focus on growing your business without worrying about complex server tasks.

Cons of Dedicated Servers

Dedicated servers offered in the market are pretty standard. They are only suitable for businesses that have general server needs. If you need special hardware configuration, you may need to consider colocation. Although there is no upfront cost for dedicated server, the monthly fee will be higher than colocation.

Pros of Colocation

With colocation, you own the hardware which gives you complete control of the choice of hardware, software and application to be installed. Your equipment is sent to the colocation provider’s data center, installed and typically not touched by the provider unless you request for remote hands services, or there is an issue that needs immediate intervention. The host provides you with space as well as other services such as internet connection, redundant power sources and physical security. If you need extra power or bandwidth, additional charges will be incurred. The monthly cost of colocation includes the rent for the server space, maintenance and software licensing, which is typically lower than a dedicated server. The colocated hardware is your property. You can enjoy greater flexibility to plan for growth, to incorporate mirroring, load balancing and other options that are not available for dedicated server.

Cons of Colocation

A big lump sum of money is required for initial setup. Businesses who choose colocation also need to bear the cost of spare parts, maintenance and upgrades. You need to have the manpower and knowledge in house to run and setup the server from scratch. Traveling to the data center is required to perform off-site work on server. If the data center is in a foreign country, you may need to hire a local technician to manage the server directly for you. Or you may pay the colocation provider a remote hands fee to repair, diagnose, replace, or troubleshoot any problems you have with your equipment.

Factors to Be Considered When Choosing Between Colocation and Dedicated Server

FactorsColocationDedicated Server
CostHigher cost for initial setup, lower monthly fee for server spaceLow upfront cost, higher monthly fee in the long run
Knowledge / manpowerNeed to hire personnel with expertise to run and manage the serverLess manpower is required. Can pay your host for server management services
Need for special hardware configurationYesNo
Flexibility / scalabilityAble to grow and upgrade your space and technology as your company growsNo long-term engagements


Colocation is great for businesses that have very particular technical and hardware requirements, and have the skills and knowledge in house to manage the servers. If the pre-built configurations are totally ok for you, dedicated server will be a good choice as it requires far less in-house IT expertise than colocation. Smaller businesses may prefer dedicated server because it requires less investment in hardware as well.

Dataplugs provides both dedicated servers and colocation services in Hong Kong Tier 3+ data centers. All servers are in safe hands with our world-class infrastructure and 24/7 server monitoring. Remote hands support and server management services are offered by our experienced onsite technical staff around the clock. Contact us by phone +852 3959 1888 or email to learn more about our services.