A colocation (colo) is a data center facility in which a business can rent space for serversand other computing hardware.
Typically, a colo provides the building, cooling, power, bandwidth and physical security while the customer provides servers and storage. Space in the facility is often leased by the rack, cabinet, cage or room. Many colos have extended their offerings to include managed services that support their customers' business initiatives.
There are several reasons a business might choose a colo over building its own data center, but one of the main drivers is the capital expenditures (CAPEX) associated with building, maintaining and updating a large computing facility. In the past, colos were often used by private enterprises for disaster recovery. Today, colos are especially popular with cloud service providers.