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Feb 14, 2019

Retail Colocation vs. Wholesale Data Centers: What’s the Difference?

Dan Beers, President and VP, Asset Management

What’s the difference between retail colocation data centers and wholesale data centers? What makes colocation either retail or wholesale? Before we answer these questions let’s address colocation first.

What is Colocation?

First, let’s address, “What is colocation?” Colocation involves the housing of multiple servers privately owned and networking equipment in an off-premise, third-party data center. These data center facilities can be sub-leased by various tenants for their IT infrastructure needs. There may be virtual or physical servers in these data centers, network routers and switches, storage devices, and other types of IT equipment or hardware.

What is Wholesale Colocation?

Traditionally, wholesale data centers were facilities where businesses with large footprint requirements rented space and power, bringing everything else with them: IT staff, hardware, IP carriers, cloud connectivity—the works.

What is Retail Colocation?

On the other hand, retail data centers provided some or all of those services for what are generally smaller deployments.

Today, there are many “retail” colocation providers that can accommodate very large footprints while also providing managed services, on-site staff, and carrier and cloud connectivity. In other words, the line between retail and wholesale is much blurrier.

What Are the Benefits of Retail Colocation?

This new status quo is perfect for customers that require large footprints but also want and need the additional services of traditional retail colocation. Let’s dive a little deeper into what the landscape looks like now.

Data Center Power, Space and Pricing

The amount of power required has been the main factor that determines whether any given deployment is a good fit for a retail or wholesale environment. Some data center providers may consider deployments over 100 kW wholesale. Others might set the cutoff at 500 kW or even as high as 1 MW.

And of course, how much power your deployment requires is closely related to how much it will cost, with larger footprints naturally getting more competitive base rent rates. This also means that in general, customers pay a higher rate for smaller footprints.

When it comes to large footprints, it’s not just about power, however. Space is limited in any data center, and for deployments with large power footprints, that has traditionally also meant a large physical footprint.

But with advancements in power density capabilities, the amount of space required has decreased. For example, 1 MW may have required 10,000 square feet of space but can now fit into, say, 3,500 square feet. This is one reason that many retail data centers are now able to accommodate wholesale-sized infrastructure deployments.

Data Center and IT Services and Staff

With any data center provider, you’ll be able to benefit from the physical security measures of the data center, whether robust surveillance, biometric scans or the like. But apart from that, with traditional wholesale data center solutions, all businesses got was the “dirt”: They essentially just rented the space and power capacity and had to handle the rest.

Conversely, retail data centers weren’t necessarily equipped with the power or space to handle those larger footprints but offered additional services to their customers: managed services, remote hands, 24-hour IT staff, wide IP and cloud connectivity.

So for businesses with larger deployments, bringing those additional capabilities to wholesale data centers could be burdensome. Today, with the right data center or colo provider, you don’t have to choose one or the other.

Colo, Cloud and Network Connectivity

One of the biggest service differences between traditional retail colocation and wholesale data center providers is connectivity, whether cloud or IP. As previously mentioned, traditional wholesale customers had to bring their own carriers and direct connections to their cloud platforms.

By working with an IT infrastructure provider that offers both network connectivity and IP services—in addition to your power and secure cabinet or suite—you can simplify your infrastructure solution and reduce the number of vendor relationships you have to manage. This also allows you to leverage the blend of carriers your data center is connected to for applications that require low latency.

Yet while robust connectivity solutions and a wide mix of carriers are enough for many businesses in the market for retail data center space, sometimes customers need more.

Gaming company Blade requires ultralow latency for its cloud-hosted gaming PCs, which is why they are taking advantage of Performance IP, our automated route optimization engine.

Do You Need a Service Partner or a Landlord?

Traditionally, the wholesale data center solutions market was suited to businesses looking for a landlord: If you knew exactly how much power you needed and where you needed it, you could get the space, power and autonomy needed for your IT infrastructure—and at a good rate. If you wanted the full spectrum of services retail data centers provided, however, you were out of luck.

But in today’s market, it’s not all-or-nothing. For businesses looking for a true service partner, not just a landlord, a data center provider like HorizonIQ can be invaluable.

We have state-of-the-art facilities in 21 metro areas, including flagship data centers in Tier 1 markets like New York, Boston and Los Angeles, in addition to wholesale capabilities in strategic locations like Phoenix, Dallas, Atlanta and Seattle data centers. As a colo, cloud and network IT provider, our unique breadth of services and capabilities differentiates us from many competitors in the space by enabling us to provide fully comprehensive, high-performance IT solutions.

We can help you scale and plan for growth, while providing you all the connectivity and additional services you need. It’s not retail versus wholesale anymore; it’s about what your applications, customers and business demand.

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About Author

Dan Beers

President and VP, Asset Management

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