Glossary

Colocation (Colo)

Also known as: colo, retail colocation

A data center model in which the operator owns and runs the building's power, cooling, and physical security infrastructure while multiple tenants lease cabinet, cage, or suite space and install their own servers and networking gear.

Colocation sits between retail managed hosting and wholesale/hyperscale leasing on the data center spectrum, and it is distinguished from wholesale primarily by tenant scale and the granularity of the lease: colo tenants might lease a handful of cabinets (a few kilowatts) up to a private suite (hundreds of kilowatts), whereas wholesale tenants lease dedicated halls or entire buildings at multi-megawatt scale. Colocation revenue is typically priced per kilowatt of committed power plus recurring cross-connect and remote-hands fees, giving it a services-and-real-estate hybrid character that supports higher margins and shorter lease terms than wholesale, but also higher operating complexity, more churn, and greater sensitivity to interconnection ecosystem strength. Retail colocation providers compete heavily on carrier density and interconnection options, since a facility with many network and cloud on-ramps becomes self-reinforcing as more tenants want proximity to those same connections.