Is your web host depending on a retail or wholesale data center? Does it matter? Different data centers may specialize in serving different industries, but two of the biggest include retail and wholesale. What’s the difference between the two? Today, the lines are getting blurrier between the two as definitions shift and data centers evolve. Basically, a wholesale data center lets a company (such as a web host) rent a whole, completely provisioned facility to use. It’s kind of like when a company rents an entire office building instead of just one office. The wholesale data center, of course, still belongs to the owner, but it largely appears and operates like it belongs to the client. Also, just like renting an entire office building, the maintenance, taxes, upkeep and such are the responsibility of the owner—not the company renting the space.
A retail data center is like renting an office or a handful of offices in an office building. These customers share the facilities and tech support with others, which dramatically lowers costs for your company. Customer can put IT equipment (which is owned, not leased) in rows and racks near hardware owned by others. There’s always an increased security risk when you share space, but that shouldn’t be a worry if you do your research and select a colocation data center with proper safeguarding in a prime location. Both retail and wholesale rental options have their pros and cons—cost is a big one—and of course, the bigger the company the more likely the need (or eventually need) for wholesale space will occur.
Why Not Just Own It?
There are certainly some (very big!) companies that buy or build their own data center. Is this a better approach? It depends. That’s similar to asking if it’s better to rent an office in a building, rent the entire building or buy/build your own. Depending on your business, your budget and your goals, each one might have a prime place in your plan at some point. There may come a time where it just makes sense to “own a data center.” However, before making that move, you’ll probably be renting a wholesale colocation data center and saving a bundle. When renting, you don’t have to be the one dealing with maintenance, auxiliary generators, environmental controls, power provisioning, ensuring power supplies can’t be interrupted or prioritizing connectivity. You also don’t have to be the one staffing, hiring and managing what ends up being a very large and complex data center staff.
Wholesale data centers are ideal for very big clients. How do you know when you’ve “become a big client?” The rule of thumb is: You’re a potential wholesale client if the costs add up in your favor if you have an IT equipment power need of at least 1MW. If that’s you, you already know you’re one of the much bigger fish in the pond.
Many businesses will never get big enough that they require wholesale data centers (and certainly not owned data centers). If retail sounds up your alley, you can enjoy more flexibility and the upside of an IT platform that’s scalable. You can “grow” the services you get from your “landlord” or shrink them as necessary. Since there are a bunch of lessees just like you taking advantage of the data center, retail “colos” are often a much better fit when you have small to mid-sized IT needs. However, retail data centers aren’t “just” for the little guys. Many of these centers are sprawled out over several acres, and you can rent as much space as you need. Ultimately, a supersized data center can be operated for you via a retail data center, saving you a lot of money compared to wholesale options.
However, there’s always going to be the fact that retail data centers mean shared space. It’s not dedicated just for you, so you really need to stay on top of security systems. Tour the site if possible, ask as many questions as you can about 24/7 security and focus on specifics. For example, walled cages that are solid, the hiring process of employees, movement tracking at all times and POAs for security breaches are critical. Security is still an issue in wholesale data centers, but not as much. With every extra cook (lessee) you have in the kitchen, your security risks go up. It’s up to the data center to protect you, but it’s up to you to check their tactics for doing so.