Data Center Types Explained in 5 Minutes or Less

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Data centers are the backbone of our digital world. They store, process, and distribute massive amounts of data that drive business operations, communication systems, entertainment platforms, and more. As our data needs continue to grow exponentially, data centers must evolve to keep pace.

There are many types of data centers available today, each suited to different business needs and budgets. In this comprehensive guide, we‘ll explain the most common data center types so you can make an informed decision about which is right for your organization.

What is a Data Center?

Before diving into the different types, let‘s start with a quick overview of what a data center actually is.

A data center is a dedicated facility that houses computing and network equipment such as servers, switches, routers, and firewalls. The purpose of a data center is to efficiently store, manage, process, and exchange large amounts of data.

Key components of a data center include:

  • Servers – These are powerful computers that run applications and workloads. They store and process data.

  • Storage – This refers to the disk capacity available to store data like documents, photos, videos, applications, and databases. Storage can be physical or virtual disks.

  • Networking – The equipment like switches, routers, and firewalls that facilitate communication between devices within the data center and connect it to the outside world.

  • Cooling – Data centers generate a lot of heat. Heating, ventilation and air conditioning (HVAC) systems remove this heat to maintain optimal temperatures for hardware.

  • Power – Servers and equipment need abundant, uninterrupted power. Data centers have backup power supplies and generators.

  • Security – Physical and network security measures like surveillance cameras, access control systems, and firewalls help secure the facility.

Organizations use data centers to efficiently run everything from internal enterprise applications to public-facing websites and services. Next, let‘s look at the main types of data centers available.

Managed Data Centers

A managed data center is one where a third-party service provider hosts, monitors, supports, and manages the IT infrastructure on your behalf. The level of management can vary from partial oversight to fully managed where they take care of everything.

Managed data center providers offer services like:

  • Leasing space, power, and cooling in a shared colocation facility
  • Providing dedicated leased servers in their own data center
  • Offering private suite space within a public data center
  • Building an in-house data center for you to lease
  • Providing public, private, or hybrid cloud services

The provider handles infrastructure maintenance, security, upgrades, and troubleshooting so you don‘t have to. This makes managed data centers ideal for organizations that want to outsource the hassle of running their own facility.

When to Use

Managed data centers are best suited for small to medium sized businesses that want a reliable, scalable data center solution without the capital and operational costs of owning their own facility.


  • Cost Effective – No need to invest in real estate, construction, hardware, maintenance, staffing, and utilities. Pay only for the managed services used.

  • Scalability – Easily scale available power, space, cooling and computing resources up or down as needed.

  • Flexibility – Tailor managed services to your needs and budget. Go from partial to full management as needed.

  • Reliability – Providers use redundant power, cooling, and network connections to maximize uptime.

  • Expertise – Gain access to skilled data center engineers for deployment, maintenance, and troubleshooting.

  • Security – Physical and network security measures are taken care of by the provider.

Enterprise Data Centers

Enterprise data centers are private data centers built and operated by large organizations to serve their own computing and data storage needs. Rather than leasing data center space from a provider, they invest in building and running their own facility.

Enterprise data centers are often massive in scale and cater to the needs of global corporate giants. They are customized to meet the regulatory, redundancy, and workflow requirements of the business.

Some features of enterprise data centers include:

  • Located on private corporate property and secured with restricted access

  • Designed and built to meet specialized business needs

  • May have different types of sub-data centers within them:

    • Internet data centers to support customer-facing web applications

    • Intranet data centers that handle internal corporate systems

    • Extranet data centers for secure B2B transactions

  • Contain redundancy at all levels – power, cooling, network, and storage

  • May have multiple replicated data centers across regions for geographic diversity

  • Staffed by the organization‘s own IT personnel

When to Use

Owning an enterprise data center makes most sense for massive companies like investment banks, telecoms, technology giants, healthcare organizations, and government agencies that have the capital, real estate, IT resources, and need for absolute control over their computing infrastructure.


  • Total control and customization – Every aspect can be tailored to business needs

  • Security – Complete oversight of physical and network security

  • Compliance – Ability to meet industry-specific regulatory requirements

  • Reliability – Redundancy and disaster recovery systems minimize downtime

  • Direct access – Internal IT staff have direct access to servers and infrastructure

Colocation Data Centers

A colocation facility is a large multi-tenant data center where organizations can lease space for their servers and networking equipment. Rather than having to build your own data center, colocation allows you to house your gear in a purpose-built state-of-the-art facility.

Colocation provides the real estate, building, cooling, power, bandwidth, and physical security while customers provide and maintain their own hardware. Customers get their own locked cages or private suites.

Colocation offerings may include:

  • Locked cages to colocate server racks and gear

  • Private suites for more isolation

  • Disaster recovery space for backups

  • Interconnection services to link with telecom carriers

  • Cloud on-ramps to access public cloud services

Colocation facilities are located in areas with access to affordable power and fiber connectivity. They contain redundancies and emergency provisions to maximize uptime.

When to Use

Colocation is a great option for medium to large companies that need a reliable and secure facility to host their IT infrastructure, but don‘t want the hassle of building their own data center.


  • Cost Effective – No CAPEX needed for building and staffing your own data center

  • Scalability – Flexibly add more space, power and cooling as needed

  • Connectivity – Carrier neutral facilities provide access to multiple ISPs and cloud services

  • Security – Physical security and controlled access provided by the colocation operator

  • Reliability – Colos provide UPS, generators, N+1 redundancies to prevent downtime

  • Expertise – Get support from experienced colocation technicians and engineers

Cloud Data Centers

Cloud data centers are facilities owned and operated by cloud computing providers like AWS, Microsoft Azure, and Google Cloud. Rather than physical servers, they contain virtualized compute and storage resources that customers access on-demand via the internet.

Cloud data centers contain huge arrays of powerful physical servers with virtualization software that carves them up into versatile cloud services:

  • Infrastructure as a Service (IaaS) provides basic compute, storage and network resources that customers use to run workloads and applications. Customers manage the operating system and application layer.

  • Platform as a Service (PaaS) provides a managed application development and deployment platform. Customers upload code and the provider runs built-in services like web servers, databases, and load balancing.

  • Software as a Service (SaaS) are turnkey cloud applications like email, collaboration tools, CRM, ERP etc. The provider manages everything including the application, data, runtime, middleware, and operating system.

Cloud data centers contain extensive redundancies in power, cooling, and network connectivity to guarantee availability. They employ advanced security protections like encryption, role-based access control, and organizational separation.

To ensure low latency, public cloud providers operate a global network of massive data centers located strategically across different geographic regions.

When to Use

Cloud data centers are ideal for companies of any size that want agile, pay-as-you-go access to computing resources without having to build and maintain their own infrastructure.


  • Agility – Instantly provision resources like additional storage, servers, or bandwidth as needed through a self-service portal.

  • Scalability – Scale elastically to support sudden workload spikes. No need to worry about capacity planning.

  • Cost Efficiency – Pay only for the cloud resources consumed per hour/month. Convert CAPEX spending to more predictable OPEX.

  • Reliability – Cloud providers offer comprehensive SLAs for uptime and failover redundant infrastructure across regions.

  • Maintenance – The provider handles all infrastructure and application maintenance and upgrades.

  • Security – Cloud providers implement state-of-the-art physical and network security controls and processes.

Edge Data Centers

Edge data centers are smaller facilities located close to end users like in urban areas or telecom exchanges. They act as quick access points to cache and process data near the "edge" of the network without having to transfer it over long distances to centralized data centers.

Key characteristics of edge data centers:

  • Distributed across metro locations to be closer to end users

  • Contain fewer servers than traditional data centers

  • Used to quickly process latency-sensitive data like streaming video or IoT data

  • Interconnected with a central data center or other edges

Edge computing places data processing at the edge, closer to where data is generated and consumed. This dramatically cuts down on network latency and bandwidth usage.

Edge data centers will play a huge role in technologies like self-driving cars, VR/AR, smart cities, IoT, and 5G that require real-time local data processing.

When to Use

Edge data centers are ideal for businesses that need to:

  • Process data in real-time with minimal latency

  • Analyze data locally instead of transferring vast amounts to the cloud

  • Cache frequently accessed content like streaming video at the network edge for faster delivery


  • Speed – Drastically reduced network latency from proximity to end users

  • Efficiency – Less long haul data transfer to central data centers reduces bandwidth costs

  • Performance – Run latency-sensitive applications like gaming and AR/VR locally

  • Reliability – Caching and localized computing mitigate the impact from central data center outages

  • Scalability – Low-cost expansion by deploying small edge data centers to locations that need more capacity

Hyperconverged Data Centers

Hyperconverged infrastructure (HCI) combines computing, storage, and networking into a single unified system for simplicity and efficiency. Hyperconverged data centers are built using hyperconverged infrastructure.

Rather than having separate servers, network and storage arrays in siloed components, HCI consolidates them into compact building blocks called nodes. HCI nodes integrate:

  • Virtualized compute (hypervisor for running VMs and containers)
  • Software-defined storage (virtualized shared storage pool)
  • Software-defined networking (virtualized networking and load balancing)

These nodes are clustered together to create a scale-out hyperconverged data center. HCI is inherently software-defined, allowing all resources to be managed centrally.

When to Use

Hyperconverged data centers simplify infrastructure management and make it easy to add nodes to scale-out. They are ideal for medium to large organizations running virtualized workloads that need to start small and grow incrementally.


  • Simplicity – Converged components managed through a single interface

  • Efficiency – More performance from fewer data center components

  • Scalability – Scale linearly by adding modular HCI nodes

  • Resilience – Inbuilt data protection with native snapshots and redundancy across nodes

  • Cost Savings – No need for overprovisioned resources since everything is pooled

Hyperscale Data Centers

Hyperscale data centers are mammoth facilities custom built by companies like Facebook, Amazon, Google and Microsoft to support their massive cloud infrastructure. They contain hundreds of thousands of servers and provide virtually limitless compute and storage capacity.

These are the world‘s largest and most powerful data centers spanning millions of square feet. They utilize extreme power densities of 25+ kilowatts per rack requiring advanced cooling techniques like thermal energy storage and immersion cooling.

Hyperscalers directly buy server hardware in high volume and use open source software to keep costs low. Their sheer scale provides huge cost efficiencies.

Key attributes of hyperscale data centers:

  • Huge clusters of modular data centers linked as a giant pool of resources

  • Often built where land and power are inexpensive like high latitudes and rural areas

  • Leverage economies of scale with massive server purchases and optimized designs

  • Built for elastic scalability using automated infrastructure management

  • Designed for high power density with advanced cooling techniques

  • Develop customized hardware and software specifically tuned for performance

When to Use

Hyperscale data centers power the world‘s largest cloud platforms. Unless you are Amazon or Microsoft, this level of infrastructure is not realistic or economical for most businesses.


  • Massive economies of scale – Drastically reduced TCO through extreme standardization and automation

  • Virtually unlimited capacity – Support exponentially growing workloads by adding more modules

  • Innovation – Drive improvements in energy efficiency, server design, and data center infrastructure

  • Elastic scalability – Thousands of servers and petabytes of storage can be instantly provisioned as needed

Which Data Center is Right for You?

With an understanding of the key data center models available, you can determine which approach best meets your infrastructure needs and budget. Here are some tips:

  • Small Business – Managed data centers provide a cost-effective, scalable foundation without huge upfront investment.

  • Mid-Size Company – Look to colocation or managed private cloud suites to gain flexibility as you grow.

  • Large Enterprise – An enterprise data center provides ultimate control and customization for complex environments.

  • Rapid Growth – Cloud data centers allow seamless scaling and no capacity planning worries.

  • Latency Sensitive – Edge data centers speed up delivery of localized, real-time data services.

  • Consolidating Infrastructure – Hyperconverged data centers simplify sprawling resource silos.

The data center landscape continues to evolve. As your needs change, you can switch between different data center models to best align with your business. With this overview, you have the knowledge to make the optimal choice for today and prepare for the future.

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