Virtual Data Centers vs. Data Center Colocation. What’s the difference?

Virtual data centers are the new sheriff in town. Everyone wants in on them. But there is a lingering question over it:
What is the difference between Virtual Data Center vs. Data Center Colocation?

To answer that, let’s dig into their origins.

The Origin of Data Center Colocation

There are several variations of the origin of data center colocation, but here is the most relatable one.

Before data center colocation became a business enterprise worth investing in, companies and business organizations had to build and maintain on-premises IT infrastructure to facilitate their computing demands.

These IT structures were built in proportion to the company’s size. Since most companies started small, their IT infrastructures were relatively small. However, the growth of the companies would stretch onto their IT demands, making it imperative to expand their IT resources.

Some of these companies grew so big that they had to build private data centers to keep up with the business computing appetite. But there was a catch.

Running a data center was like running an affiliate company. It needed managerial staff, administrative staff, skilled service workers, infrastructure, security, and a 24/7 shift rotation. In more concise terms, it was expensive to run a data center.

Despite the tremendous operational cost, private data centers had a lucrative feature to harness. The bigger a private data center became, the more resources it had to spare. And fortunately, these resources were in high demand.

Renting out companies’ excess IT resources to smaller companies was soon introduced. The service was initiated to alleviate the operation cost of a private data center. But, it quickly grew into a more profitable enterprise on a larger scale. Today, we call that practice data center colocation.

The Origin of Virtual Data Centers

The history of Virtual data centers is separate from conventional computer virtualization. As stated earlier, virtual data centers are quite new in the cyber tech industry. On the other hand, computer virtualization has been around since the 1960s.

The virtualization of data centers depends highly on cloud computing. It is also important to note that the earliest traces of virtual data centers only go as far back as the early 2000s. However, cloud computing is a lot older.

Many still regard cloud computing, coined in 1996, as a growing yet immensely impactful technological innovation. In the second quarter of 2021, Europe’s cloud computing market was worth over 7.3 Billion euros!

Cloud computing is currently divided into three categories:

  • Mainly PaaS (platform as a service)
  • Laas(Infrastructure as a service)
  • SaaS(software as a service).

The IaaS is the formative origin of data center virtualization. The concept aims to convert IT resources propelled by conventional hardware components into virtual programs. Virtual data centers are among the successfully virtualized infrastructures in this case.

What Is the Difference Between Virtual Data Center Allocation and Virtual Data Center?

Data Center Colocation.

Data center colocation or colocation center is a service-oriented enterprise that provides data center facilities to businesses and companies willing to co-locate their physical IT components.

The data center facility is provided and managed by third-party experts in data center management. Attached to the facility rent are the necessary server maintenance routines and B2B updates from the colocation provider.

Using a colocation service is practically renting a data center along with the staff it takes to manage one. However, your colocation provider is also responsible for the IT resources of other users within that data center.

With all that being said, the most notable thing about data center colocation is that the users are required to move their server components to the data center they rent.

Virtual Data Centers.

On the flip side, Virtual data centers are entirely virtual. While the concept is considerably related to data center colocation in terms of physical facilities and staff services, it primarily invests in the exchange of computing power and resources.

The virtual data center service sells computing resources to users through subscription plans, making it possible for clients to request more extensive computing resources as needed.

With a virtual data center, users won’t need to own the physical IT components or a server rack. It would only take a strong internet connection and smart devices to access the computing resources.

For clarity, data center colocation focuses solely on space allocation and the aids necessary to keep clients’ hardware running. It has nothing to do with the computing power the server generates, especially when the factors that enable this are outside the confines of the provider’s jurisdiction. In other words, servers’ capabilities are the users’ priority, not the provider’s.

On the other hand, a virtual data center operates the computing power already generated by a stable data center and then sells out these resources in units of time and capacity.

Virtual data centers are cloud-based and technically unlimited. So the more extensive your computing demands are, the bigger your subscription fee.

What Are the Similarities Between Virtual Data Centers and Data Center Colocation?

The two data hosting systems:

1- Share several similarities and

2- Interlocked over certain levels of provision.

  • First, both systems rent out resources in units and are responsible for the performance evaluation of these resources.
  • Both systems require physical data center components and infrastructure to operate.
  • Both systems help increase scalability and fluidity within data-oriented businesses.
  • Last but not least, both systems are remotely operated and maintained by third parties.

Can You Buy a Virtual Data Center?

Buying a virtual data center in the sense of owning a virtual data center the same way one could acquire a private data center, including its location site and peripherals, isn’t technically feasible.

However, you can rent a virtual data center and customize it to suit your needs. You can also integrate other categories of cloud computing into your virtual data center. As long as you have the storage capacity, there is little or nothing that you can’t do with the computing resources you paid to acquire over an active time frame.

Will Virtual Data Centers Phase Out Data Center Colocation?

No. Virtual data centers won’t phase out data center colocation.

Virtual data centers are perfect for businesses that take on projects involving multiple software and several integrations. It also has a near-impregnable backup system that protects business data in case of a disaster. However, it’s less grounded than data center colocation, as most users prefer to own their utilities.

The sense of control that comes with data center colocation services is reassuring, and the fact that clients can scrutinize and meet with their colocation providers induces an added sense of security.

Again, both systems are not entirely independent of one another. Like the hybrid cloud, data center colocation and virtual data center can fuse to achieve optimal results.

Here are five reasons you should incorporate colocation into your cloud computing plan.


Now that you know how both systems work, you can choose how to use them or harness their strengths together or independently.

However, If you own a startup and need to decide on what data center strategy to use, start with the more grounded technique—Data center colocation. You can initiate virtual data centers when you get comfortable and confident in your investment and workflow.

One of the best colocation platforms to start with is Coloco. Our services are synchronized with the most recent and functional data center upgrades. Besides, we have a plan for every budget. Try Coloco today.

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