SUMMARY: The answer will surprise you. Colocation can be a much better option than cloud for certain types of applications. Read on to see why
Colocation, which means buying your own hardware up front and running and managing it in a third-party site, is not usually seen as a cheaper alternative to cloud. But, oddly enough, it can be.
Last week I compared cloud instances against dedicated servers showing that for long running uses such as databases, it’s significantly cheaper if you go with dedicated servers, but that’s not the end of it. Since you are still paying for those server resources every month, if you project the costs out 1 or 3 years, you end up paying much more than if you had just bought the hardware outright. This is where buying your own hardware and colocating it becomes a better option.
Continuing the comparison with the same specs for a long running database instance, If we price a basic Dell R415 with x2 processors each with 8 cores, 32GB RAM, a 500GB SATA system drive and a 400GB SSD, then the one-time list price is around $4000 – more than half the price of the SoftLayer server at $9,468/year we came up with in our previous analysis.
Remember, again, that this is a database server so while with Rackspace, Amazon and SoftLayer you pay that price every year, after the first year with colocation the annual cost drops to $1932 because you already own the hardware. Further, the hardware can also be considered an asset which has tax benefits.