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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 ?
M2 EQUITYBITES-April 11, 2012-tw telecom expands co-location facility in Minnesota(C)2012 M2 COMMUNICATIONS http://www.
TELECOMWORLDWIRE-April 11, 2012-tw telecom expands co-location facility in Minnesota(C)1994-2012 M2 COMMUNICATIONS http://www.
a premier Silicon Valley Co-Location and Managed IT Solutions Provider, announced today it has completed its SAS70 Type II audit and has achieved the compliance for its Co-location facility in Santa Clara, CA.
Our co-location facility provides our trading and data clients with a single point of access to our multi-asset class trading enterprise with the fastest possible response times," said Brenda Hoffman, senior vice president and chief information officer, TMX Group.
In a co-location facility, or Web server farm, your server is stored in an environment with other companies' servers.
MegaWorld will deploy the first BypaSS7 systems at its New York City Co-Location facility, with a total network build out scheduled for completion in 2001.
KVH"), Asia's leading information delivery platform providing integrated cloud and network solutions, today announced that CME Group has approved KVH as a provider of connectivity services into and out of the new CME Co-Location facility.
This new secure co-location facility features 24-hour manned security, biometric access control, video surveillance and physical locks.
Over the years, we've invested more than $30 million into developing a solid foundation for a well-engineered co-location facility with redundant power, cooling and large variety of network feeds.
The average European co-location facility is still three times larger than its US counterpart although larger facilities have become more common in North America than before, according to a new survey by Band-X, a provider of a telecomms-specific trading exchange.
Southern Telecom's highly secure co-location facility in Birmingham, Ala.