Why Colocate?

[KingJ]

I've been looking around recently for options to expand my servers further. Currently, all servers are rented from various companies in various datacentres. However, I thought that now that the company had a bit of capital built up, it might be advantageous to start colocating servers instead of renting them.

 

Looking around though, most companies (PoundHost for example, I need BlueSquare collocation - don't feel like driving miles!) colocation for 1U is the same as an entry level server - and often with more transit. So not only do I have to buy the server, make a trip to the DC to fit and fix it but I still have to pay just as much for someone else to do it all for me.

 

The only situation where it seems vaguely advantageous is if you are colocating a very powerful machine, but even then you are likely to need more U of space, costing even more.

 

So why should I colocate? Why do you colocate?

[Goran]

Hi,

 

Well recently I collocated servers in Croatian datacentar. We bought 2 very powerful machines like 2x intel quad xeon 5410 @ 2.33, 16gb ram, 500GB HDD etc.. all in 1U based on intel.

 

The reason why we done this is :

 

1. You can buy only 1 remote license, and put twice more game servers than on the rented one.

2. The place where I live is around 300Km from the data center, I travel for 2 hours.

3. If I rent the server I need to pay bank taxes if I send money over the border.

4. If someday something happens to your rented servers, do they guarantee you that they will repair it? And if they do it can take ages.

 

Of course I also have rented servers, but slowly I'm canceling them and buying my machines. Also when you buy your machine you can make VPS from it and earn even more than just selling game servers.

 

Cheers

[maddanny]

Well, there a lot of reasons to use collocation instead renting servers.

First is that you can choose your hardware as you want (but you need spare and using remote hands - $$$$ - for replacing it or living near the datacenter)

Second, you can choose your bandwidth providers as you want (but you need to buy - at least - one router, configure it and dealing with network problems)

Third, you can do a lot of things: automatic server installation from ghosts (very usefull when disk failure), using own SPLA licences, have KVM over IP and many others !

The last, when you're buying 10 servers you have better prices

 

We're not doing only GSP, we're also an ASP, so we're hosting SQL and Exchange servers for customers and they dont like having their datas on rented servers ! In our secure rack it's much better

[KingJ]

We're not doing only GSP, we're also an ASP, so we're hosting SQL and Exchange servers for customers and they dont like having their datas on rented servers ! In our secure rack it's much better

 

Ah, I can see how that plays into it. The data on game servers is not as critical however but I can see how having owned hardware in a secure rack controled by you would be used when securing potentailly sensitive data.

[studeggle]

For the most part it comes down to size, I think you will find the majority of people that collocate are renting bear minimum of ¼ cabinets and often ½ , full cabinets or even cage. When you start talking this kind of volume the price becomes significantly cheaper to collocate then rent dedicated.

Then there are also issues like control, we utilize remote kvm switches at our collocates as we believe it to be an invaluable tool. But many places don’t even offer this service, and for those that do it is often $150 - $200 per dedicated server which would break our budget.

You also have a misconception that powerful machines require more then1u we don’t utilize less then dual quad core machines for gaming which by dedicated standards is a powerful machine but all of our gaming systems are 1u. The only place we utilize larger machines (4u) is actually for web and that is because we are running dual raid 50 arrays too ensure we don’t loose customer data from hard drive failures as we host business customers and loosing there data could be costly for the company, and we of course can’t fit all those hard drives into little skinny servers. But I think hard drive space is the only problem with 1u systems when trying to build power, and gaming systems don’t need lots of hard drives.

Also something I see not mentioned by the others is the recoup factor. While you will often only have a couple years of gaming use out of a new machine (specs you build too will effect exactly how long) the systems are still usually working machines that can be utilized for other purpose like Teamspeak, Shoutcast, Web, Test servers, or even resold. Allowing you to capture funds back, wherewith dedicated the company you rented it from owns it.

Also there is company salability should you decide to leave the GSP market. If you rent a bunch of dedicated servers and build a company on that. You will likely get very small offers as the purchaser must assume your dedicated server rentals to keep things stable, or they are just bidding on a customer list. Of which probably at least half would go elsewhere. On the other hand when you have collocated, you have a bunch of hardware making things far more flexible. Which attracts more potential buyers and the more potential buyers you have the more likely you are to get a truly good offer as all the buyers see each other as competition.

There are certainly reason to collocate, there are also certainly reasons to go dedicated. It all comes down to business plans!

Decide how you want to run?

How long you want to run?

Then crunch the numbers…

[Joshdch]

We are in Blue Square Data Center in the UK if you are looking for some space =)

 

And the reasons why to colocate are simple. If your renting a server so say a Q6600 it costs say £400 to buy.. and your spending £100 a month for rental.

 

6 months in you could of bought it and colocated it and saved money.

 

6 months = £600 4(months purchase) £400 + £50 per unit on colocate = £500 for the 6 months not £600 saving £100.

 

But that is a basic example their, also purchasing and hosting it in the data centre means you have an asset to your company.

 

If you say to someone im selling my business and i rent 2 dedis.. or say i own both dedis again you will get more money simple.

 

But if you need more help and advise and such and looking to get into this i'd be happy to help and answer anyone's questions just pm me or add me on msn/email me.

 

Thanks

[Joshdch]

Also i forgot to add.

 

When growing your business with more machines the prices change when you reach a 1/4 (quarter rack level) normally about £300 to £400 holds 10/11 machines.

 

People may charge you £40 to £50 per machine x 10 around £500+ max again only saving 100£ or more but it all depends on those 10 servers you could be selling them at £100 per machine making £1k so £500 profit a month.

 

This is all basic its not always as simple. I myself have just purchased a new full rack and getting more space as we speak. But we are looking to break into a 3 or 4 rack margin next year if the projections are right at the end of this financial year.

[DougK94]

Check with your accountant for tax purposes too. Factor in depreciation and what deductions you may be able to take for colocation vs renting. What works best for one person, may not be the best for you as there are many factors to consider. There are successful GSP's operating under each model or a combination of the two.

 

The initial hurdle for colocating vs renting is the startup capital needed to purchase all of the required hardware and software licenses you will need. As stated previously in this thread and others on this topic, the smaller GSP is generally better off renting, but for a larger GSP colocating is usually the better option.

[Joshdch]

But if he is wanting to break into that factor of becoming a large GSP which most people want to do he needs to bite the bullet and move in quick or hes going to keep spending money on the rentals when he could save money and add a asset to his company.

 

Of course you need to look at your accounts and finances but i think to get a decent machine and colocate it your looking at spending between £350 to £500 depending on the specification of the machine.

 

If you have one built already then its the option of finding who is best.

 

Now when your looking in colocation its not always the best price your looking for. The support is vital in these cases as you are needed to do "more" lets say.

 

Rent a dedi and it dies, the hoster will fix it/replace it.

Colo a dedi and it dies, your expected to pay/replace or fix but some hosts like myself will help you get it either working again, or if its hardware issue warranty and replace it.

 

But their are those kind of issues again which you need to look into as well but if you speak to a few hosts they will tell you what they can do for you.

[KingJ]

Wow, huge volume of replies - thank you very much!

 

To give you a better idea of our size, we are currently renting out just a few servers, mainly in the Netherlands with one in the US. I am UK based myself, and would like to get at least one box here, I considered colocating due to my proximity to BlueSquare.

 

I didn't realise you could get high-end servers in 1U form, which then makes the ~ £45/pm colo fee much more attractive if you stick in a high end server as Joshdch suggested.

 

As Joshdch also pointed out, renting does allow you to blame the provider for any hardware faults, but unless you have an expensive SLA there is no time guarantee. With colo you are responsible yourself for going down there and fixing it. With regards to that, are you able to attach a screen to the server while it's in the rack, or do you have to buy one of those very expensive rackmount screens?

 

Another advantage of renting to me is the Windows licensing, I simply pay a small amount for it. Is this still available to me via the datacentre as SLPA or something?

 

I was only thinking of colocating one server at the moment, i'm not aming to be big. Hosting game servers is more of a "profitable hobby" for me, rather than a full time job. Who knows though, it might evolve into that one day.

 

I'm going to have a look at what options are available to me for mid to high end 1U servers now, and get some figures down.

 

Thanks again for all your comments.

[Joshdch]

Hi mate

 

I believe with my experience with data centers their is normally well in Blue Square when i went down their is a "Trolley" which has a screen on, keyboard usb and built in mouse on the keyboard which makes it easy to wheel it next to the rack.

 

If you were or anyone to come with me i'd be able to give you access 24/7 to your machine, and support via the phone and someone is on site to help you.

 

As for your windows license issue some providers are able to install it for you at a small cost since these kind of providers have thousands of servers to manage and get requests to do so.

 

I'll be able to help you out their like i have with another user on the TCAdmin forums which is co-locating with me and hes from the states.

 

As again you said about the hardware issue again if your covered yourself you don't need to worry. But if your renting a machine off a company they could of had that machine 4 years or more ago and renting it out to you. So again they might say no and put the charge on you like some providers i know do so.

 

Have you ever built a 1u server before? As if you need help advise and such i would be happy to help you or even so buy the parts and build it for you and send it down to the data centre to get it colocated in our rack as i have done with a few new customers.

 

But anymore questions let me know =)

[KingJ]

That trolley sounds good, I was imagining i'd have to lug a monitor in with the server

 

I am fine with installing windows myself, both server and otherwise. All I need is a key, which is what I presume they give you. I like to keep unessential costs as low as possible, i've got time.

 

I had a look at your offerings for Colocation, my only concern is the bandwidth on the 1U offering - just 310GB. My average bandwidth on my main server is 0.8TB/mo, with a peak of 1.1TB back in September.

 

That is true about the age of the hardware too, however I assume that with the latest processor techs being supported by the server that the hardware for it is fairly recent. Another good thing I have just remembered is that you are insulated from insane pricing. One provider wants an additional 20 euro a month (and a 50 euro setup fee) just for an extra 2GB of RAM - you can get 2GB of high quality RAM for less than 20 euros anyway!

 

I've never built a 1U server before, just plenty of ATX machines and the odd mini-ATX. Again, that might be a better option than buying from Dell or similar as I know exactly what is going in and it tends to be cheaper too.

[Joshdch]

Yeah you can choose the unlimited gaming b/w pacakge and monitor the b/w but we can work around that for you.

 

just email us and we will be able to help you along with the license key

[KingJ]

I'll consider that, thanks. Still collating various figures.

[SickPuppy]

This is from another post but I think it cover the question quite well

 

The cheapest way to go is to build your own dedicated server and Colo it. You can build a Dual Quad Core server with eight gigs of ram and two 500 gig HDs for $1400.

 

Over the average lifespan of the server (5 years) that comes out to about $23 a month. You can Colo the server for another $100 a month, which brings the monthly bill for a Dual Quad Core system to $123. There are a few other expenses you have to factor in such as maintenance fees and replacement parts.

 

If you use a 15% model, which is what we use, that will bring your monthly expense per server to somewhere around $141 per month per server. Renting the same system is going to cost you $400 or more. In a five-year period, that is $24,000. You can save around $15,000 by building it yourself. That is a $3000 saving per server per year. Multiply that by 15, or however many servers you plan to deploy, and that is a $45,000 savings per year.

 

Do not confuse this with your net income for the servers this is just an estimate in cost savings. Your net income per server will vary based on price per slot but even at $1.00 a slot, you can turn a $350 net from each server. And that, ladies and gentlemen, is how you make a profit at $1.00 a slot.

[KingJ]

Thanks for that SickPuppy, helps put things in perspective.

 

Does anyone know of any good sources for server hardware/cases in the UK? I normally source all of my components and such from ebuyer, but they don't have any offerings for server components/cases.

[Joshdch]

xcase do 1u stuff

[KingJ]

Thanks for the link to xcase, shame they don't also do components to save on delivery.

 

Anyway, i've priced it up and for a decent system (Quad 2.4, 4GB RAM, 250GB Drive, Case, PSU, Cooler) it comes to around £400. On top of that, colocation fees are around £50pm + £20 for Windows.

 

I don't think I am going to jump into colocating just yet. For it to pay off compared to renting, a fairly powerful server is required. I am unsure of how much extra demand I will be seeing in the near future. Therefore, I am going to rent a reasonably price Dual Core system to add enough capacity for what I can anticipate and see how things shape up over the coming months with regards to demand.

 

Thanks to all who have helped explain all the ins and outs of colocating to me, you've been a great help.

[Joshdch]

no problem mate, you got my info contact me if you need me =) enjoy.