Colocation

Colocation is a service where a data center operator rents space, power, and cooling to customers who install and operate their own servers and network equipment. The provider maintains the building, redundant power feeds, UPS systems, generators, cooling, physical security, and connectivity; the customer owns and manages the IT hardware inside. Pricing is typically per kW of contracted power or per rack, with retail deals starting from a single rack unit and wholesale deals spanning multiple megawatts. Colocation sits between on-premises data centers (customer owns everything) and cloud computing (customer owns nothing physical). The global colocation market exceeds $60 billion annually and is growing at double-digit rates, driven by cloud on-ramps, enterprise outsourcing, and AI capacity demand.