Many potential customers come to us each day asking if they would be better off colocating or simply leasing a server from us.  I am hoping to shed some light on this age old question to help those of you who are pondering this very scenario.  As we tell each person who asks us, the best option really depends on a few variables.


First let’s define each solution so everyone knows exactly what the 2 options are, that we are discussing.  To lease a server from Hivelocity or any other dedicated host, simply means the host provides the server hardware and you pay a monthly fee for that server to remain online.   A leased server typically involves you simply going to the host’s site, choosing a configuration from their cart that suits your needs and submitting your order.  A few hours to a few days later your server is online and you are given remote access.  The 2nd scenario we are going to discuss is colocation.  Colocation means the customer provides the server hardware and the host simply provides the space and infrastructure.  Simply said, you get your server delivered to the data center and the data center puts it in a rack, gives you the ip to access it and you are off and running.


Now that we have defined each solution in very simplistic terms, we can figure out which option is the best for your particular situation.  In my experience, 9 out of 10 times the customer is better off leasing a server from the host rather than colocation.  That being said, that leaves 10% of the time that the customer is better suited to collocate.


Pros and Cons to Leasing

Minimal upfront costs– the cost of leasing a server is only a fraction of what that server costs to go out and purchase from companies like Dell, Supermicro or HP.  You might be able to lease a $3000 server for only $200 per month.   Hivelocity’s dedicated servers start at just $59 per month.  The host typically doesn’t make money on you for 3-12 months and only turns a profit after you have paid them enough months to cover their costs with their supplier.  Because of this, the host has a serious interest in keeping you happy and making sure you stay with them for a long time.  They do want to make a profit after all.


Host supports the hardware– because the host is supplying the hardware; it is their responsibility to fix it when something goes bad.


Host has replacement hardware on stock…at least they should- since the host is more than likely supplying you with a server they keep in stock and sell many of, they should have replacement parts on hand at all times.  In the event something does break the host should be able to go to their inventory room and find you a new good part to install within a few minutes.

Upgrade simplicity- unless you sign a long term contract, most hosts these days will allow you to go month to month.  When the day comes you need more ram, a better CPU or whatever else, you simply call your host and tell them.  The host then gives you the upgrade options and if you agree they then perform the upgrade at your convenience and it only costs you a few bucks more if anything.


Not stuck with antiquated hardware- in this day and age servers become old technology pretty quick.   Every few months Intel releases a new generation of processor or adds a few cores and you find yourself on last year’s technology.    Hopefully, your host is buying and offering the latest processors and memory shortly after they are introduced.  If you buy a server one year and decide you want to upgrade to the latest and greatest the next year, just let your host know and let them figure out the upgrade path for you.  Since last year’s 4 core 2.4 GHz chip costs about the same as this year’s 4 core 2.4 GHz chip you can usually upgrade to the newest generation of chip without spending anything extra each month.  Let your host figure out what to do with last year’s processor.


Over time it will cost you more- since it is normally more expensive each month to lease than colocate, even if only by a little, over time it is cheaper to collocate.  Typically you do not see the savings for a couple of years but it is a savings.  Since most everyone plans to keep the server online for years and years hoping their online presence remains a success, most people should over time experience a savings with colocation.


Pros and Cons to Colocation

You control the guts– you bought the hardware so you control exactly what guts go into the server.  When you colocate you really have the ability to choose every component that goes into the server right down to the video card.  Hosts are out to make a buck so when you lease a server you can’t always count on getting the best of the best of hardware.


Less per month- since you are supplying the hardware you are only paying for the space, power and bandwidth your server requires.  There is no hardware expense added to the formula when the host generates their monthly cost.  Typically you can colocate a 1U server with sufficient power and a reasonable quantity of bandwidth for less than $100 per month.  The bigger your server, the more money it will cost.  Hivelocity charges $49 for a 1U and $25 for each additional U of space your server takes up.   Think of a 1U of space as a pizza box.  If you are colocating a tower server you can count on spending a bit more than a rack mount because those towers take up a lot of valuable real estate within the host’s server racks.


More Up Front- if you are supplying the hardware and you are using server grade gear then count on spending at least $1000 up front to purchase the server.  Depending on how nice of a server you want and if you wish to have RAID or SAS drives, then it can add up to a few thousand dollars real quick.


Your hardware, you supply replacement parts– You cannot expect your host to keep in inventory the exact hardware you have used to build your server.  If you have colocated a server that takes only a specific brand of memory and your host doesn’t typically carry that brand, guess what, when the ram fails it’s up to you to supply the replacement memory.  If you have loaded your server with 1TB 10K rpm SAS drives and your host doesn’t offer that particular size or model and you have a drive fail, guess what, it’s up to you to figure out the solution.


Antiquated hardware- when you buy a server you can count on that server having a previous generation of something within about a year.   When you colocate, you own the hardware and therefore in a couple of years you own an antiquated server that your peers will be making fun of in a couple of more years.


Bottom Line

As I said at the very beginning, 9 out of 10 times I would recommend you lease your server from the host.  If you happen to live a few miles away from a data center and it’s convenient for you to drive over there when you need to physically work on the server then colocation is a good option.  If you happen to have a server already that you just need to find a home for, or if you have found a good deal on a new server AND you live close to a hosting facility, colocation is a good option.  Otherwise, pay a low monthly fee and eliminate one of the many things you have to worry about in life.  Let the host fix and replace the hardware and let the host worry about upgrading you to the new equipment when you are ready.  The internet is 24/7 and do you really want to drive over to a data center in the middle of the night when a stick of ram goes bad?

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