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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 ?
In this role, Danko will be responsible for the development of domestic, international and subsea carrier business for the 1025Connect interconnection and colocation facility.
In building its own data centre or rented a colocation facility, a company continues to be responsible for the data processing hardware and IT infrastructure software.
This new facility, Zayo's second colocation facility in Northern Virginia, is located at 1764 Old Meadow Lane and is 62,000 total square feet.
The facility, Zayo's second colocation facility. Zayo plans to upgrade the critical power at the site to three megawatts and enhance systems resiliency, security, audit certifications, and network connectivity.
In early 2016, Epsilon deployed its infrastructure in EITC's datamena colocation facility enabling it to bring its services closer to its partners in the Middle East.
"du's colocation facility, subsea and terrestrial capacities together with Epsilon's Infiny platform and network reach, will allow us to offer Enterprises, Carriers, Cloud & Content providers the simplest and most efficient way to connect sub 10G network services to the Middle East," said Jerzy Szlosarek, CEO at Epsilon.
Stellar Trading Systems has hosted its infrastructure at DGCX colocation facility to deliver its market making, low-latency order routing and algorithmic trading solutions to DGCX members.
An organization availing a colocation facility out only reduces their operational cost but also leverages the provider's bandwidth to gain better speed for their business critical operations.
It works with branch circuit monitoring systems to monitor and manage their power system information, whether its a large corporate data center or a colocation facility. The software integrates facilities and IT departments.
Headquartered in Wyoming, Green House Data breaks ground this year on a new 35,000 square foot cloud and colocation facility in Cheyenne, with phase one slated for completion by the first quarter of 2014.
NYSE Technologies has since enhanced its connectivity to SGX by extending SFTI into SGX's colocation facility itself, allowing firms colocated with SGX to connect to the wide range of venues and services available on SFTI.