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What is the difference between colocation and dedicated hosting?

Although both the services are on lease with a data center, there are a number of differences between a colocation and a dedicated server hosting. In colocation service, a customer decides to lease a rack or cabinet in a third-party colocation center to place server hardware and other equipment, and shares the services of the center with other customers. While, on the other hand, in a dedicated server hosting, a customer leases an entire server in a data center dedicated server him only, and doesn’t share resources with any other customers.

Also, in a colocation service, CAPEX is borne by the customer, and pays rent to the colocation center for the services on the monthly or yearly basis; but in a dedicated server hosting, the customer pays rent for the dedicated server already housed and owned by the data center.

A colocation service is the best option for businesses having no budget constraint as it offers a greater level of customization.