Abstract—The predicted capacity gain of a traditional colocated MIMO system is often severely limited in realistic propagation scenarios, especially when the number of antennas becomes large. Recently, a generalized paradigm for multiple-antenna communications, distributed MIMO, is proposed as a remedy. In this paper, through asymptotic large-system analysis, we provide solid justifications on the advantages of distributed MIMO over co-located MIMO when communication channels are subject to spatial correlation and shadow fading. We also exploit inherent macrodiversity in distributed MIMO to devise a costeffective link adaptation scheme that achieves significant performance gain.