In 2023, “virtual colocation” was not a single, settled industry term. In business IT, it could refer to managed colocation or colocation-based infrastructure as a service (IaaS): services that let a company use data-center facilities and, in some cases, provider-managed virtual or physical resources. The model appealed to growing businesses seeking facility infrastructure, location choice, and cloud connections without building a data center of their own. It did not mean that colocation was automatically cheaper or instantly scalable.
What did “virtual colocation” mean?
In conventional colocation, a business rents data-center space and facility infrastructure—such as power, cooling, physical security, and telecommunications access—then supplies and operates its own IT equipment. Managed colocation can go further: the provider operates an equipped data center and may supply resources such as virtual machines (VMs), applications, or backup services. TechTarget’s colocation guide distinguishes these service models.
Equinix’s November 13, 2023, explanation uses “colocation-based IaaS” for on-demand infrastructure from a colocation provider. Customers may choose the physical location, and resources may be virtual or physical, shared or dedicated. Bare Metal as a Service is a dedicated physical-server option within that broader range. This is a provider’s description of its service model, not an industry-wide definition. Equinix’s explainer
The phrase also has a separate, narrow regulatory meaning. A Moldovan telecom regulator uses “virtual co-location” for a fixed-network interconnection arrangement in which equipment space is allocated at another provider’s premises without a protective separating structure. That telecom usage is not a synonym for cloud VMs or commercial colocation-based IaaS. Moldovan regulatory decision
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Why fast-growing businesses considered it in 2023
1. To avoid building and running a data-center facility
Building a data center means taking responsibility for a facility’s power, cooling, security, maintenance, and other operating needs. Colocation shifts some or all of that facility burden to a provider. Depending on the agreement, the customer may still own and operate its servers, or may rent managed resources instead. It reduces the need to build a facility; it does not remove every infrastructure cost. TechTarget
2. To get provider-managed infrastructure and hands-on support
Managed colocation can bundle provider-operated infrastructure with resources such as VMs, applications, and backup. Some providers also offer remote-hands assistance for physical tasks, which can help a business without staff at the facility. What those services cover, how quickly help arrives, and whether it costs extra depend on the contract. TechTarget
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3. To choose where infrastructure sits
With colocation-based IaaS, a customer can select a physical deployment location and, where offered, replicate infrastructure across sites. Facility location can matter for latency, data-location requirements, and closeness to network-connected services. These are practical reasons to compare actual facilities and available connections rather than choosing on the service label alone. Equinix
4. To connect private infrastructure with cloud services
A colocation facility can be part of a hybrid-cloud design, connecting a company’s infrastructure with public-cloud services. Cross-connects can provide a direct network path to a cloud provider, but availability depends on the facility and service. As a regional example, SEACOM’s April 11, 2023, announcement described cloud-provider cross-connects in its South African offering; it should not be read as a capability guaranteed at every colo site. SEACOM announcement
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5. To match shared or dedicated resources to a workload
Some colocation-based IaaS offers virtual, shared infrastructure; other options provide dedicated physical servers. Bare metal gives a customer dedicated server resources and more direct hardware control, but it is not the same model as shared virtual infrastructure. The choice depends on workload requirements and how much hardware and operations control the business needs. Equinix
6. To adjust capacity as requirements change
A colocation agreement may allow a business to add or remove space or equipment as needs shift. That flexibility is contractual, not instant elasticity: TechTarget notes that capacity changes can take weeks or months, and contract terms may limit adjustments. A fast-growing business should confirm delivery lead times before relying on expansion to meet a near-term demand spike. TechTarget
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7. To use a provider’s facility, security, and connectivity investments
Providers may invest in resilient power and cooling, physical security, and network interconnection. Those investments can be valuable, but a service name or marketing claim does not establish how a particular facility will perform. For example, SEACOM’s 2023 announcement described its own security measures and a 99.999% power SLA. That was a provider-reported commitment for its offering, not an independently verified performance result or an industry-wide guarantee. SEACOM announcement
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess the trade-offs before choosing
- Compare total costs: Request an itemized quote covering recurring fees and any charges for space, power, connectivity, setup, remote hands, and other services. Providers may bundle or bill these differently, so colocation is not automatically cheaper than public cloud or an owned facility. TechTarget
- Read the contract for flexibility: Check the term and renewal provisions, expansion and removal rights, price changes, capacity reservations, and exit terms. Colocation commitments can last years. TechTarget
- Test what the SLA actually promises: Review what is measured, outage definitions, reporting access, escalation, remediation targets, and credits. A headline availability percentage alone does not establish service performance. TechTarget
- Confirm physical access and support: Establish who may access equipment, what remote hands include, response expectations, after-hours procedures, and additional fees. TechTarget
- Ask for delivery lead times: Confirm how soon the provider can deliver space, power, ports, and cross-connects. Contractual rights to expand do not guarantee that capacity will be ready when a workload needs it. TechTarget
- Match the service model to the workload: Compare public-cloud shared infrastructure, dedicated bare metal, customer-owned equipment in a colo, and fully managed services by performance, hardware control, data location, operational effort, and compliance requirements. TechTarget Equinix
- Verify location and network options: Check the specific site’s cloud connections, carrier options, routes, and fit for the workload’s latency needs. Do not assume a capability described for one facility or region is available at another. Equinix SEACOM
What 2023 market forecasts did—and did not—show
A 2023 overview from Clifford Chance cited a forecast that the global data-center market would reach €235 billion by 2026, with a projected 4.5% compound annual growth rate. It also reported expected growth of 15% for the European data-center market, compared with a 13% global average. These were historical forecasts for the data-center market—not measurements of virtual colocation adoption or present-day results. The same overview attributed 2% of global greenhouse-gas emissions to data centers, without enough methodological detail in the cited material to treat that as a current, independently verified estimate. Clifford Chance, 2023
Is virtual colocation the right fit?
It could suit a business that wanted data-center facilities, location choice, dedicated hardware, managed support, or connections between private infrastructure and cloud services. The right comparison is not simply “colo versus cloud”: it is between specific service models, facility locations, contracts, costs, operational responsibilities, and workload needs. In 2023, the phrase itself was ambiguous, so buyers needed to establish exactly what a provider meant by it before comparing offers.
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