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Locating customer equipment in a third-party datacenter. Colocation often refers to Internet service providers (ISPs) or cloud computing providers that furnish the floor space, electrical power and high-speed links to the Internet for a customer's Web servers. Colocation eliminates having to build a secure facility that provides power and air conditioning for company-owned servers. In addition, colocation centers are often located near major Internet connecting points and can provide access to multiple Tier 1 Internet backbones. Although most equipment monitoring is performed remotely by the customer, a colocation datacenter may offer equipment maintenance and troubleshooting arrangements.

Other Colocation Scenarios
The term stems from the telephone industry when one telco would house the equipment of another to facilitate interconnections. Another type of colocation could be a computer distributor or online retailer who locates its warehouse within a PC manufacturer's facility to improve turnaround time to customers. Contrast with managed services. See cloud computing and ping power pipe.

Colocation Earns Millions

High-frequency trading firms are able to colocate their servers next to the servers on the stock exchange floors to reduce travel time in executing orders. According to the July 2, 2010 issue of "THE WEEK" magazine, and as extraordinary as it may seem, studies revealed that shaving one millisecond from every trade could be worth USD $100 million to a high-speed trading firm over the course of a year.
References in periodicals archive ?
Asset Vue customer Steel ORCA describes itself as a full service Digital Utility Center (DUC) rather than a traditional colocation facility due in part to the types of services and solutions it is able to offer its IT clients.
CRG West, one of the largest managers of network-neutral data centers in the United States, will soon open its first New York City colocation facility at 32 Avenue of the Americas, the high-tech Tribeca office building owned by the Rudin family.
Moving servers and related equipment off-site to a colocation facility can solve both of these problems.
the pan-European operator of carrier-neutral Information Technology (IT) MegaPlexes, has launched its fourth IT MegaPlex colocation facility, located in Milan, Italy.
DENVER -- FORTRUST, Colorado's leading high-availability data center services provider and colocation facility, today announced a partnership agreement with Consonus, a leading data center hosting and Managed IT Services provider.
23, 2013 /PRNewswire/ -- Pavlov Media announces the company's Chicago Colocation facility is now fully 10Gigabit capable.
Tech Valley Communications declared that it has inked a purchase agreement with TelJet Longhaul LLC to buy latter's majority assets, including its fiber optic network and colocation facility.
The Company will add 75kW of critical electrical power to the colocation facility and increase cabinet capacity by 15% in the first quarter of 2007.
The site is intended as a 5MW, Tier III colocation facility.
It has become mission-critical to have sufficient capacity and the most reliable and secure colocation facility available," said Frank Sandmaier, Associate Vice President, Technology Infrastructure for Broward Community College.
Need to Know News and Rapidata deploy at CoreSite's Washington, DC colocation facility
It has become mission-critical to have sufficient network capacity and the most reliable and secure colocation facility available to house our infrastructure," said City of Doral Mayor Juan Carlos Bermudez.