The biggest advantage of collocation is the cost for bandwidth. For example, a low cost limited bandwidth business grade DSL line generally costs around $150 to $200, but for the same price or less a single server can be placed in a collocation facility that provides higher bandwidth speeds and better redundancy for the network connections. These savings can be even greater if the only dedicated network access is a more expensive full or fractional T1 lines.
collocation facilities have better outage protection. During a long ice-storm last year, my office was without power for three days. While we have a backup generator, it wasn’t powerful enough to keep the server running that entire time, so our Web sites were down during that outage. At a collocation provider, we are paying for power generators and backup power to protect against that type of situation.

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Tosh
Dedicated Hosting

We own the server machinery. If we decide that the machine is too slow or doesn’t have enough memory, we can simply upgrade the server. We don’t have to wait for our provider to get around to upgrading it.
We own the server software. I don’t have to rely on my hosting provider to install the software or tools I want to use. I simply do it myself. If I decide to use ASP or ColdFusion or ASP, I just purchase and install the software.
If we move, we can leave the server up and running the entire time. When we host our own domains we have to either pay for two lines for some time, to move the domains to the new location or deal with outages while the servers are moved to the new location.

collocation providers provide additional security for your machines. Your server is stored and maintained in a secured environment.
Most collocation servers offer a service where they will manage and maintain your server for you for an extra cost. This is especially useful if you don’t have IT team members or your office is located far from the provider.

oops guys so many advantages.It looks like you all are well versed in hosting business .Well now lets talk about the downside i mean disadvantages of collocation hosting?Lets see how many i am going to hear??
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wipr
Wipro Dedicated Servers

collocation providers can be hard to find. You want to find one near where your office or home is located, so that you can upgrade and maintain your server when you need to. But unless you live near a large city with major network hubs, chances are you won’t find many collocation options.
collocation can be more expensive than basic Web hosting. This is especially true as you have to maintain and manage your servers yourself, so when the server needs to be upgraded, you need to purchase that hardware and install it.