Colocation server is an option for individuals and small businesses who want all the benefits of having a popular website , but don't necessarily want to pay for the bandwidth that such popularity requires.

A company will store all of its sensitive data — web pages and downloadables, for example — onto a server, and then physically haul the server to a different location. This location is the home operation center of the server colocation provider. Once you have your server there, the server colocation provider will take over and install your server in their rack.

In effect, you are sharing bandwidth with the server colocation provider; this is how you avoid bandwidth charges. You can also rent a server from the server colocation provider. In that case, you own no part of the process but the data.

Once the server is installed, you receive an IP address, which allows you to connect to your server from afar and, naturally, allows your customers to connect to your website. If you have loads of traffic or lots of high-density files being downloaded all the time from your site, then your bandwidth will consequently be high. By placing the bandwidth responsibility with the server colocation provider, you avoid paying a charge for it.

The provider will charge you for the space your server takes up, of course. In some cases, this charge is actually higher than what you would pay if you hosted the server yourself. Usually, however, your expenses will be lower with server colocation.