Colocation Resurgence: Global Growth 2022 & Beyond

Colocation is a concept as old as dedicated servers themselves. The fact is that bare metal solutions require dedicated space and experienced technicians. When ideal conditions are needed to keep your servers running, why not leave your hardware with facilities built around their maintenance? By hosting your servers in a larger provider’s data center, you not only gain access to premium security, cooling and the fastest possible networks, but also a number of associated financial savings. For many organizations, colocation has been a proven solution for decades.

But with the advent of public cloud providers like AWS and Azure, has co-location of dedicated servers become an outdated infrastructure solution?

Ten years ago, there were many who would have said “yes” to you. But as these early users have realized, the cloud is not a perfect panacea: despite all its benefits, its flaws are just as prevalent. The fact is that renting your digital infrastructure on-demand will always be more expensive than owning your servers directly. Although it does not look like that when you sign the contracts, the fees count eventually.

Now that many early users are approaching or passing the ten-year mark with their public cloud solutions, market trends are revealing a growing step towards colocation, a resurgence of dedicated bare metal server solutions and a growing reliance on hybrid cloud infrastructure .

In this post, we will look at some of the evidence supporting the growth of colocation, its expected market potential in the coming years, and why your organization would benefit from a hybrid cloud colocation solution with Hivelocity.

Market trends, annual growth and expected totals

Colocation is flourishing. According to a new report available through, the global colocation market is growing at a compound annual growth rate (CAGR) of 12.44%. Assuming this trend continues through 2028, the report predicts global market growth for the colocation industry to increase from around 41 billion in 2020 to 101 billion in 2028. Another report from Grand View Research, places these figures even higher and estimates the current market value of co-location at $ 44 billion with a CAGR of 13.3%.

In other words, despite the cloud, the dependence on colocation is still growing.

But why? Why are more and more companies going back to colocation-based solutions for their digital infrastructure?

The fact is that renting your digital infrastructure on-demand will always be more expensive than owning your servers directly.

There are many reasons why companies are switching to co-location. Whether it’s a desire to reduce public cloud costs and reduce overall dependency, a move towards smaller, greener alternatives to bulging hyperscale data centers or a need for the location – specific benefits of newer edge facilities, there are many factors that contribute to this move. from pure cloud-based solutions.

In the end, the question is not, “why do so many companies choose colocation?“, but rather,”is it time for MY company to consider co-location as well?

Why Colo? The Benefits of Colocation

Rows of colocation server cabinets ready to be filled with dedicated servers

There are many benefits associated with colocation. In the time of dedicated on-site servers, the main benefit of colocation was to reduce physical space requirements. Instead of building server space to house your servers on site, colocation allows companies to leverage the existing square footage from an established provider. This means that not only do you save on the cost of building and maintaining server space, but it also means that future growth opportunities are not limited by the lack of physical space to expand into.

In addition to the space issue, the utilization of the larger facilities in a real data center also means price breaks in electricity costs and access to superior networks. Because these facilities move large amounts of data, they exert increased power when negotiating with power and network service providers. This can lead to significant price breaches, which are typically passed on to customers as an incentive to use their services.

In addition, it is important to remember that a data center’s business depends on its reputation. Mistakes are expensive and new chances are rare. For this reason, co-location facilities place emphasis on reliability, implementation of various fail-safe and essential emergency measures to mitigate disaster. This protects not only their business but also yours, ensuring the best protection of your servers and data. It also means that these data centers seek out best talent in the industry, hiring technicians who are truly experts in their fields. With 24 × 7 support staff on site, issues can be resolved as they arise, providing instant answers when timing is critical. Through managed service packages, these skilled technicians often act as crucial lifelines for their customers, and they offer peace of mind and deliver their expertise. Even better, because of the scale of these facilities, retail colocation providers are able to offer this level of support at a fraction of the cost of hiring your own full-time in-house technicians. This means cost savings for you and less stress for your employees.

Now, in the age of the cloud, this concept of “on-premise servers” is mostly gone. With everything stored and running through various cloud services, the risk of physical space constraints is virtually non-existent. As a result, the new increase in colocation is not due to people moving servers offsite, but rather a shift from on-demand virtual instances to dedicated just metal resources. In other words, the biggest benefits of colocation today are about superior computing power and the potential for cost savings.

Despite the cloud, dependence on colocation is still growing.

But what about the bare metal options offered by providers like AWS?

While it is true that an increasing number of cloud providers offer just metal solutions to their customers, the options available are typically limited. After all, the cloud business model is built around the sale of prefabricated packages. Out-of-the-box functionality often comes with a loss of flexibility.

Instead, by purchasing and hosting dedicated servers through a retail colocation facility, organizations are able to specify each element of their underlying hardware and software. Do you prefer a specific control panel or server brand? When you purchase or store servers through a colocation provider, your options are not limited to the provider’s preferences. Do you want to keep your data in a specific country? By housing your bare metal solution in an edge data center, you can keep your servers where your customers are, reducing latency and enhancing the user experience. In short: When you co-locate with a dedicated server, you retain control over all of these choices and more.

Now, supporters of the cloud will be quick to point out its convenience, lightness and scalability as clear benefits of a public cloud solution. After all, these elements have become significant factors in the construction of modern digital infrastructure. Can just metal really provide the same level of functionality?

In short – Yes. At the end of the day, all cloud solutions run on top of bare metal resources. The difference comes down to a question of access: how much are you actually able to interact with or manipulate the underlying hardware. As a public cloud customer, that access is incredibly limited. But once you own the servers, you have full access to everything.

What actually makes the cloud so convenient comes down to a mix of virtualization and containerization, orchestration tools for cluster management, and the ability to upgrade infrastructure on-demand. These three components are essential for dynamically creating and managing instances, but these tools are not limited to the cloud. With a dedicated server, free solutions such as Proxmox VE and Governors can give you the same level of custom instance management. Orchestration tools such as Terraform and Ansible lets you integrate and automate these instances using simple code that helps unite your infrastructure across the board. Even better, the open source, vendor-agnostic status of many of these solutions means you are not limited in the tools you use. API hooks let you easily integrate with third-party applications and control every inch of your digital infrastructure from one place.

At the end of the day, all cloud solutions run on top of bare metal resources. The difference comes down to a question of access.

In addition to these similarities, the unique thing about a real bare metal solution is that you also have the option to completely forgo virtualization by running your applications directly on your server’s OS. For resource-intensive processes, especially those that use AI, the elimination of a hypervisor can lead to significantly faster output and higher reliability. Best of all, you can still scale and scale your infrastructure as needed using dedicated servers for immediate implementation. This ability to grow on-demand can even be automated so that your cluster’s resources can work with maximum efficiency. For more information on how to easily integrate the Hivelocity Public API with your favorite orchestration software, check out our API documentation pages.

In the end, bare metal can do everything the cloud can and more – often for a fraction of the price.

Hivelocity Colocation & Hybrid Cloud Solutions

Rows of colocation cabinets with a technician working on a client's server

The fact is that despite all its convenience and name recognition, the cloud is not perfect. Data transfer is expensive and the stress of complex workloads can quickly stop the systems. With many early cloud adopters reaching their ten-year mark with these services, market trends are showing a growing movement back to more traditional hosting solutions. These companies are aware that a combination of elements from their current cloud solutions with the underlying resources of a true bare metal server can provide them with hybrid solutions that offer the best of both worlds. Thus, they prove that you do not have to eliminate your dependence on the cloud completely to regain control of rising costs. By strategically implementing the right hybrid solutions, you can save as much as $ 15,000 a month, or, depending on your usage, potentially even more. The right solution for your organization is out there – it may just not be the one-size-fits-all package put under pressure by public cloud providers.

Just metal can do everything the cloud can – often for a fraction of the price.

Instead, through a mix of colocation, bare metal servers and public cloud integration, your digital infrastructure can remain groundbreaking for years to come, all without breaking your budget.

So, calls or chat with one of our agents or request a quote today through our colo side and see how colocation and a dedicated server solution from Hivelocity can help you avoid the cloud’s financial pitfalls. Whether you need instant servers or a completely customized solution, Hivelocity is the hosting provider that has your back.

Come see what the difference in Hivelocity can mean for you and your organization.

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