What Is the Difference Between Colocation and Web Hosting?

What Is the Difference Between Colocation and Web Hosting?

When choosing how to host a business online, there are typically two ways to go about it: invest in, and manage, your own hardware and software or pay to use the equipment of a hosting company.

Written by Anthony Carter, Managing Director, Connotations (Carman Online Content Publishing Ltd.) Published Thursday, 01 March 2018 09:13

When choosing how to host a business online, there are typically two ways to go about it: invest in, and manage, your own hardware and software or pay to use the equipment of a hosting company.

If you decide to purchase your own web server, you have the option to store it in-house or rent space at a data centre and store it there. The latter is what is known as colocation.

If you opt to pay a company to take care of hosting then you’ll be paying to use their servers, which are also stored in a data centre. In this instance, you will be signing up for web hosting.

Colocation and web hosting serve the same purpose: to provide storage space for data and keep your business online. Both offer great advantages but the differences between the two mean that neither is right for every user.

Taking Control of Your Servers

The biggest difference between colocation and web hosting is control. Colocation provides all the benefits of a data centre – modern infrastructure, military-level security, reliable speed and connectivity, on-site technical support, redundancy, and risk management – while still allowing you full control of your IT equipment. While some types of web hosting, such as dedicated and managed hosting, offer a high level of administrative control over servers, you never own the equipment being used. With colocation you do.

Think of colocation as renting office space. The property owner owns the space being leased, but you own all the furniture and can configure it however you like. As you own all the hardware and software associated with your network, you can tailor equipment to suit the specific needs of your business. On the flip side, this means you are responsible for installation, updates and continued monitoring of the equipment, as well as maintenance and upgrade expenses. However, for many, the ability to oversee and modify every aspect of their hosting according to the exacting needs of their business outweighs investment costs.

With most popular types of web hosting – shared, cloud-based, and virtual private server (VPS) – this level of control is just not possible. Servers are owned by hosting companies and house multiple websites. A typical shared server, for example, can host around 3,000 websites. Because of the shared nature of the servers, users must adhere to restrictions on services.

Security and Reliability

One advantage that web hosting has over colocation is price. Shared and cloud hosting is a cost-effective hosting solution while colocation requires significant investment. However, while often reliable, cheaper hosting comes with several potential flaws.

As mentioned, shared hosting places your services on the same server as potentially thousands of other users (this is how hosting companies keep costs low). The same is true of VPS, albeit on a lesser scale (VPS hosting is usually limited to a maximum of 20 sites per server).  And shared space means shared memory. If one site receives a lot of traffic or runs into issues with code, it can impact massively on server resources, leaving little for other sites. This can result in websites loading slowly or, worse, going down completely.

With cloud hosting, issues can arise from low bandwidth impacting website performance and poor internet access affecting services on both business and client sides. Hosting can also be vulnerable to hacking. If you do opt for web hosting, it is imperative that you go with a provider with proper certification and a reputation for outstanding security and uptime.

As colocation is a completely private set-up, hosted on a dedicated server configuration, none of the negative issues associated with web hosting apply.

Pros and Cons of Colocation and Web Hosting

As with the differences between the two options, both colocation and web hosting come with unique pros and cons that will influence your investment decision. Let us briefly take a look at what these are.



  • Full ownership of all hardware and software
  • Full control of hardware and software configuration
  • Use of data centre IT infrastructure and security
  • More bandwidth than is achievable in an office environment or shared web hosting account
  • Lower risk of website downtime or network vulnerabilities
  • 24/7 technical assistance


  • Initial investment can be costly
  • User is in charge of updates, upgrades, and maintenance

Web hosting


  • Cost effective hosting suited to small businesses and beginners
  • No responsibility for the maintenance of hardware
  • 24/7 technical assistance
  • Instant scalability


  • No ownership of IT equipment
  • Lack of full control of hardware and software
  • May have to share server space with other users (depending on hosting solution)

Choosing the right option for a business really comes down to how much control those responsible want to have over servers and whether a hosting company can meet their precise requirements.