If you really need to lease resources by the hour then by all means, go with virtualized servers. But for one of the web apps I'm building I know that there's a

If you really need to lease resources by the hour then by all means, go with virtualized servers. But for one of the web apps I'm building I know that there's a high chance that I'll need to keep the servers around for at least a year. The prices on e.g. hetzner.de (I'm not a customer, I just read about it on HN) totally blows EC2 Reserved Instances out of the water. I don't know why you consider dedicated servers capital assets. Maybe if you're colocating your own servers, but I plan on renting dedicated servers that a hosting company provides. They'll be responsible for replacing the hardware if it fails. Turns out that renting a dedicated server and colocating your own costs approximately the same, assuming that the hardware never fails. If the hardware does fail then renting a dedicated is cheaper.