Many large corporations have the Internet infrastructure to host their own web servers and have a team of IT professionals to manage and design the site, individuals and small companies do not. There is a wide range of options available from simple hosting up to running your own web servers off of a dedicated internet connection. One such option is colocation.
Colocation is often used in the data sourcing industry to mean off-site data storage, usually in a data center. This is very important for businesses since the loss of data can be crucial for companies of any size.
Colocation allows companies to place servers in a rack and share receives bandwidth. Some of the advantages of colocation are the cost for bandwidth and higher outage protection.