With the online industry primarily at a halt (or an amazing stand still at best,) e-business economists are struggling to reduce operating costs for their respective companies. For the dot coms thriving on high traffic, there is no doubt efforts have been put towards trying to reduce hosting or bandwidth costs. As the Internet server hosting market has evolved, many companies have focused a great deal of time into determining the cost advantages and disadvantages of collocation over dedicated serving. After a bit of research, we have established that collocation is not always the most cost efficient choice. For instance, if you chooses to co-locate, you first must purchase all of the hardware (a server - worth between $2,000 and $5,000 low-to-mid end.) You could easily have already spent $8,000, but keep your checkbook handy. We still have seven day support to pay for incase something goes wrong with our server, but your monthly fee may be significantly lower than what a same-range dedicated server would cost you (depending on the plan, of course.)
However, if you already own the hard ware, it may be wise to simply ship it to your local data center and co-locate it. This option is especially attractive when you are knowledge in the hardware and software running on your system. For the rest of us, who don't own hardware and cant afford to buy hardware, we'll be stuck paying for dedicated servers.
Co-location can be compared to dedicated servers as buying a home and paying property tax to renting an apartment. Both have their advantages, but they vary person to person, company to company. The only real way to know what you are getting into is to sit down and do the math. Co-location is more expensive right away, and cheaper in the long run. Dedicated servers are more expensive in the long run, but cost less in the short run.RateMyHost.com
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