A colocation facility (colo) is a data center or telecommunications facility in which a business can rent space for servers, storage devices and other computing and networking hardware.

Colocation is when organizations place their own servers and other essential computing hardware for data storage in space rented in a physical data center owned and/or operated by a third party.

Difference Between a Data Center and Colocation A data center is a physical location that houses equipment used to power the cloud. Whereas colocation is a service you can use to set up your own cloud infrastructure or components in someone else's data center.

On-premise data centers offer complete control and customization but require significant upfront costs and maintenance. Colocation data centers provide cost savings, flexibility, and reliability, but come with limited visibility and migration challenges.