Businesses today need the security and performance of their IT infrastructure to provide quality products and services for their customers. Many organizations undergo digital transformation to keep pace with rapidly changing demands and technologies. On-premises infrastructures offer granular control, but the investment required often exceeds the budget of smaller organizations. Nevertheless, cutting-edge technology is accessible thanks to the various services offered by colocation data centers.
Colocation has benefits for small businesses and large enterprises as well, but it’s important to know your needs to get the right solution for your specific use case. Many third-party data centers provide colocation services for managing IT assets off-prem, however, those services can be retail or wholesale colocation, and choosing the best solution depends on the specific circumstances.
Both have advantages, but in order to make an informed decision, you need to know the differences, too—which often seem blurry and hard to define clearly.
In this article, we’ll unveil the differences between retail and wholesale colocation to help you make the right decision for your specific needs. Let’s get started.
Why Colocation is Key to Flexibility
The initial investment in building an on-premises infrastructure and the considerable cost of managing it efficiently over time are major considerations for small and medium-sized companies. While it is worth it to invest heavily in physical infrastructure for large enterprises, for smaller businesses, there are more advantageous solutions that allow more flexibility without the need to sustain and manage a scalable data room on-premises.
Even large enterprises can find themselves in a situation where they’ve outgrown their on-prem solution, which was initially designed to last longer. Colocation data centers can be the perfect solution for these issues. Many large companies choose wholesale colocation to avoid scalability issues later on. However, colocation offers a highly flexible solution for smaller companies as well. Retail colocation allows businesses to rent as much rackspace as needed and benefit from the robust infrastructure of the data center, offering more energy-efficient solutions, better connectivity options, and built-in resiliency. Tenants can benefit from the data center’s power and cooling infrastructure and can even opt for various managed services to simplify the management of their IT infrastructure even more.
Wholesale Colocation vs. Retail Colocation – The Main Differences
Wholesale colocation and retail colocation are two ways of leasing data center space. These two models can be distinguished by several factors, including scale, customization options, and cost.
Wholesale Colocation
Wholesale Colocation is best suited for large enterprises that need substantial dedicated data center space. Enterprises can lease significant portions of a data center to support their large-scale data processing and storage needs. This often means entire data center rooms or floors, with extensive power capacity, connectivity options, and the facility’s robust security measures. The average wholesale colocation customer’s power requirements exceed 300 kW, but some can reach as high as 1 MW.
This model provides the infrastructure and allows the leaser to manage and customize their equipment. When opting for wholesale colocation, clients typically sign long-term contracts, which often come with an advantageous price and the possibility to scale. Usually, the cost is broken down into the fixed monthly rent for the space and the power bill, which can vary.
At the setup stage, clients have the opportunity to customize and opt for cross-connects and dark fiber. Telecom carriers and ISP options are significant considerations when a company chooses the colocation provider that best fits its needs. And because no one else is allowed in the leased space other than the leaser, wholesale colocation is a perfect fit for businesses with extensive needs and strict security requirements.
Retail Colocation
Retail colocation suits smaller businesses with less extensive data center infrastructure needs. It is a hosting service where tenants can rent server racks, cabinets, or small cage spaces in a shared data center environment. The retail model frequently includes managed services support, as well as security options.
Leasing in retail is a more flexible option with shorter terms; nevertheless, this model also comes with scalability options. It is ideal for businesses looking for a reliable data center solution with less initial investment or those who need to colocate their IT infrastructure partially.
Retail colocation accounts for more than 72% of the colocation market, making it the more frequent option. It is customizable, but not to the extent of its wholesale counterpart. Pricing is typically based on the specific infrastructure requirements of the tenant and is calculated at a monthly fee.
Is Retail or Wholesale Colocation the Best Choice for You?
Whether you need one or the other will depend on your needs. The primary consideration to start with should be the size of your IT footprint. Here are a few things to keep in mind when choosing a solution.
For Wholesale Colocation
You should consider wholesale colocation if you need hundreds or thousands of servers. Wholesale colocation comes into the picture for companies with large footprints, special requirements, and strict security rules. It is a sensible choice when an enterprise has difficulties managing quickly and unpredictably growing space and cooling needs. Other hints that you are a wholesale colocation candidate:
- requirements to power your equipment are 300kW and above
- Your deployments require high availability and reliable backup solution
- You need large-scale customization options like targeted cooling of hot spots, multiple power distribution systems, converged infrastructures, etc.
- Specific compliance and legal requirements
And lastly, choosing between wholesale and retail colocation is a cost consideration too. Wholesale colocation can only be cost-efficient for large enterprises looking for an industry solution or renting long-term.
For Retail Colocation
For small and medium-sized businesses that only need a few servers, retail is the way to go. Retail colocation offers excellent flexibility. It allows businesses to simplify the management of their infrastructure, which, in change, lets them focus on their core-value tasks to bring them growth. A retail colocation arrangement can be perfect for kickstarting and experimenting with hybrid deployments as well. From a colocation provider, it’s easy to connect to several cloud providers and check out multi-cloud environments. Retail colocation can offer scalable solutions either to the cloud or colocation, offering the most flexible and multi-option solutions possible for growing businesses. You are a retail colocation candidate if you:
- Have tens to low hundreds of servers
- You need up to 300 kW
- You need a high-flexibility, short-term contract
- You want to benefit from the fast adoption of new technologies
Conclusion
Colocation can provide the critical infrastructure, reliability, and scalability needed to thrive in today’s business landscape. Choosing the right solution can significantly improve and facilitate business operations and allow access to the robust security and cutting-edge technologies offered by the data center. Scalability is a major consideration for companies of all sizes, making colocation the perfect solution that provides space for growth at all stages.
Choosing the right provider to partner with is crucial for a smooth, long-term collaboration. Offering state-of-the-art hardware and equipment, as well as outstanding support and managed services, Volico Data Center’s colocation facilities are ready to accommodate various needs. Volico can provide your business with a reliable and robust backbone, offering security and flexibility for growth. To learn more about retail and wholesale colocation or migration services offered at Volico Data Centers, contact us at (305) 735-8098, or chat with a member of our team of technicians and engineers to get the best solution tailor-made to your specific needs.
