Colocation vs. Cloud Hosting: What is the difference, and which is right for you?

Colocation vs. Cloud Hosting: What is the difference, and which is right for you?

Colocation vs. Cloud Hosting: What is the difference, and which is right for you?

From its humble beginnings in internal papers and discussions of companies of the 1990s, cloud computing has evolved at least as fast as the internet has, if not faster.

A short history of cloud computing

Amazon (AWS) entered the cloud computing market in the mid-2000s when there was no one around to compete. They had the first-mover advantage for almost half a decade until tech giants like Google and Microsoft stepped in to compete. Innovation is bred in highly competitive environments. Cloud platforms other than Amazon soon started offering web services that competed with Amazon in cost and efficiency. Since then, companies around the world have realized the benefits of moving their infrastructure to the cloud. A decade and a half later, since Amazon’s EC2 first came into being, the cloud market is worth $266 billion. According to research by Gartner, the cloud market is expected to grow at an annual rate of 17% in the years to come.

How do businesses use the cloud?

With roughly five out of six companies already using cloud technologies one way or the other, the cloud is omnipresent now. Most of the companies are already on a hybrid cloud-based model where some of their application infrastructures are on-premise, and the rest are hosted in the cloud, some of the internal tools they use are deployed on local machines, and the rest are hosted in the cloud. The most widely used service of the cloud is SaaS (Software as a Service) — a cloud application. Spreadsheet software like Microsoft Excel has alternatives in the cloud as Microsoft Office 365, Google Sheets, Notion, and more. From CRM to payroll, from ERP to Supply Chain, from identity management tools to communication platforms, every domain has better, cost-effective alternatives in the cloud. With more companies providing cloud services, the cost-effectiveness and innovation will inevitably force most companies to move to the cloud in the years to come. They will use one or more avatars of the cloud. One was just mentioned above. The other two are IaaS (Infrastructure as a Service) and PaaS (Platform as a Service).

The future of cloud computing

The future of cloud computing looks fantastically bright. After solving companies’ basic infrastructure needs, cloud vendors have started diving into untapped and specialized markets based on their clients’ needs and requirements. You can see the examples in cloud-based services related to machine learning, computer vision, artificial intelligence, graph databases, time-series databases, and more. These tools, even non-engineering teams can also reap the benefits of cloud computing with the minimum investment of time and money. Forrester’s Predictions report for 2021 predicts that over 30% of companies will continue to accelerate their spending on the cloud. Leading CIOs will embrace cloud-first and platform strategies for speed and adaptiveness, eschewing stovepipes for end-to-end solutions. This trend is definitely going to continue to accelerate after the meteoric rise of cloud-based businesses during the pandemic. From a security perspective, the cloud can be broken down into three smaller clouds — public cloud, private cloud, and hybrid cloud. The aforementioned report also notes that the global public cloud infrastructure market will grow 35% to $120 billion in 2021. This will trickle down to all levels of businesses, which will result in increased usage of public cloud services.

Going serverless

Another big trend within the world of cloud computing is serverless computing. The idea for serverless computing stemmed from a cost-efficiency standpoint where cloud users are charged for just what they use. It started from a grain of cost per hour, but now cloud platforms offer cost per millisecond. This will keep attracting companies worldwide to move to the cloud, solving cost problems, taking care of scalability while reducing maintenance overhead. Technologies like Docker and Kubernetes have enabled and accelerated the move towards serverless. They have helped greatly in realizing the vision of building cloud-native applications in the cloud. In most areas, the future of cloud computing is more serverless than not. A major challenge in building cloud-native applications is the lack of interoperability between different cloud platforms. Because the future of the cloud is multi-cloud, this interoperability must exist.

Edge computing — the new avatar

With all the benefits of cloud computing, there are some disadvantages too. If the cloud servers are far apart, that induces a lag, especially if the node where the data is produced or collected and where the data is processed or analyzed are far apart. This can be a big problem for companies with very high volumes of data that need to be processed and analyzed very fast. To tackle this problem, cloud computing is molding itself into and branching out into a new avatar called edge computing. Edge computing brings computing physically closer to the place where the data is being generated for the processing to happen, i.e., bringing cloud storage and cloud compute closer by reducing the network in between, saving time and cost of data transfer over a network, and also creating a more secure and reliable setup for data processing.

Future of the Quantum Cloud

From early on, Microsoft and IBM have invested a lot of effort in research and development in the field of quantum computing. In recent news, Microsoft has announced that some of the quantum computing capabilities will be available for public preview from February 2021 onwards. Having said that, the current state of quantum computing is not that great as quantum computers are very far behind non-quantum supercomputers, and they have some problems of their own. Hardware companies like Intel, NVIDIA, etc., are working tirelessly on the next breakthrough in qubit processors to solve these problems and drastically increase the processing speeds. Once there’s enough development in that area, businesses will start considering a shift towards quantum computing in the long term.


The acceptance of cloud computing is growing by the day. Along with the areas of growth discussed above, there are many more like Workstations as a Service and Unified Communications as a Service that will accelerate quickly as more efficient technology gets developed to solve these problems. With this speed of growth of the cloud, it would be hard to imagine running a business outside of the cloud as it won’t make fiscal sense. Once again, the drive to be more cost-effective and efficient has driven the world of technology to a cloud breakthrough.

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Author Of this post: Eric
Title Of post: Colocation vs. Cloud Hosting: What is the difference, and which is right for you?
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