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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.
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References in periodicals archive ?
HoM's SOF1 is a Tier 1 (with Tier 2 features) GPU Mining Colocation center located in Sofia Bulgaria.
Redundancy: Know the steps your colocation center will take in case of an outage, from uninterruptible power supply systems to extra equipment.
Dubai colocation center serves as an interconnection hub for the Middle East as
One takeaway from the trip to MaineGeneral was the concept of using a colocation center where all team members can come together on a regular basis to work through the project's ebbs and flows.
Phoenix, AZ, June 27, 2014 --( coloAZ, a Phoenix-based operator of colocation and datacenters, announced a new server leasing option from their colocation center in Phoenix.
This new connectivity service offers the telecom industry's lowest-level latency for connecting JPX's colocation center, a base for major financial institutions, and the Cermak data center used by Chicago's financial market.
Provider Portfolio - Offers rapid access to information regarding more than 100 cloud services, 1,500 colocation centers and 60 carrier services;
It marks a huge step forward in achieving one of our missions: providing means for carriers among the major colocation centers operated by our partners to cross-connect.
This cloud-agnostic management platform enables companies to better manage applications and workloads across hybrid hosting environments-in customer private clouds, colocation centers and public cloud environments.
Cascade Divide Data Centers operates world-class data, cloud and colocation centers with managed IT services.