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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 ?
Advise and assist teams strove to colocate with partnered ISF headquarters to support planning and execution of the Mosul counteroffensive.
In order to support PCMH and Lean goals, at least two successful typologies are emerging--open team centers and on-stage/ off-stage approaches, both of which colocate more comprehensive care teams to optimize coordination, collaboration, and efficiency.
We colocate micro data centers with our customers who are looking for cost-effective ways to create customized data centers to meet their specific needs, said Satya Baddipudi, CTO, DartPoints.
There is an identified need to colocate SOCMINT analysts with interpreters.
As in past years, Artexpo, a juried collection of global galleries, art publishers, and established artists, will colocate with [SOLO], a juried exhibition of innovative, independent artists from around the world.
ii) colocate engineers during the prototyping and production process,
The best TMC operations colocate law enforcement, fire and rescue, and traffic reporters for rapid coordination and to share information collected through dispatch systems (if not conducted from the TMC), video feeds, signal timing, opening/closing of ramps and ramp metering, and dynamic message boards for critical messages to the motoring public.
The current standard for ILS approaches is to colocate the non-precision FAF and the precision FAF (lightning bolt) whenever possible.
The Saddle Bracket's unique, adjustable saddle design fits over existing poles with diameters up to 2 3/4 inches to colocate components such as a battery and antenna with the radio.
That always happens because when you have got procurement people, the subcontractors, suppliers, designers usually want to colocate.
And, in one medical building under construction, floors are designed to colocate behavioral health specialists down the hall from primary care physicians.