Is Colocation More Expensive Than Reselling Dedi-boxes?

Feb 18, 2007

I currently run 16 boxes which I rent from various data centers, mark-up and resell. Conventional wisdom says that it's time for me to start colocating my own servers. I've got approval for capital (loan) so it's no problem for me to just buy these boxes and colo them. But... how the hell does anyone afford it?

I mean, I can get a cabinet in H.E. with 10Mbps burst to 100Mbps for $600/mo (through EGI). Which is an insanely good deal until you realize that it only includes 15amps of power. So (I think) that means that I can really only run about 15 or 20 Celerons at the most. So much for filling up the rack.

Optimistically, if I can run 20 Celerons which I've priced at about $700 each including shipping -- plus a switch, KVM, spare parts and bank interest over 24 months -- that's about $800/mo for the servers plus $600 for the cab, plus about $200/mo for remote hands in case I need the DC guys to do something. I'm looking at about $80/mo per server which I have to pay whether it's rented or not.

I can easily find celerons for $80/mo which include some level of support and I can very easily cancel whenever my client does and buy a fresh new one whenever I get a new client.

I was all excited to go colo -- but the numbers don't add up. What am I missing here? What's the big advantage to all the extra hassle of owning your own?

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