They leverage economies of scale to provide absolute reliability at a commodity price. Value-added colocation operators supplement the basic colocation offering with optional services such as accelerated content distribution, utility storage and security. This enhances their operating margins while providing the convenience of single-sourcing to their customers. This long-established form of hosting provider specializes in hosting web site servers. Most operate their own data centers, though some also use the facilities of colocation providers.
Web hosting providers operate server farms that are dedicated to web site server hosting.
Also known as managed hosting providers, they typically offer a range of sophisticated managed services, and often take responsibility for monitoring and managing server systems up to the application layer. But because their background is in web site hosting, most of them lack higher-level application management skills. An emerging class of hosting provider specializes in offering specific basic computing functions, such as storage, as a utility service. Their services are often offered through other hosting providers, and may be based at a colocation provider's facilities. Storage service providers are the first major utility computing category to emerge.