Competition for colocation customers is intense. A colocation provider offers the end user read-to-use data center white space. Depending on the provider and the size of the deployment, that space may look different.
In smaller environments, the user might only need to install servers, network equipment, and storage into a powered-on, cooled, and contained rack. They share the data center space with other customers, and sometimes even the same server racks. This is retail colocation. For larger deals, the room might be basically an empty shell, with hookups for power, HVAC, and network cables, but little else. Most wholesale colocation deals fall into this category.
Is There a Difference Anymore?
Often times retail colocation providers will buy a large chunk of square footage from a wholesale provider and then resell the space after fitting it out with the additional equipment. However, retail and wholesale providers can compete for the same customers, especially larger enterprises who need custom builds and more white space.
Retail colocation is more service oriented, with remote hands available, a staffed NOC, and standardized products, while wholesale is closer to purchasing real estate. Another key difference was metered power purchasing, previously limited to wholesale providers but now common in retail deals as well, as customers drove demand. Flat-rate power was seen as a worse deal when systems were at lower utilization.
As the industry has evolved, wholesale and retail colocation has started to blur together. Some wholesale providers are pursuing deals as low as 100-250 kW, where the minimum for wholesale to make economic sense used to be around 1 MW. However, the additional investment in equipment and services means these wholesalers chasing smaller deals often need to revamp their model to meet customer expectations.
Picking the Best Provider
Ultimately, as wholesale and retail providers chase similar customers, the user must evaluate based on their required service levels and, of course, budget. With comparable guarantees for power and connectivity, each project has its own demands and they will dictate the best deal.