You're ignoring the financial aspect of when that money needs to be paid. With AWS it's billed gradually over the lifetime of the servers (and if you have too m

You're ignoring the financial aspect of when that money needs to be paid. With AWS it's billed gradually over the lifetime of the servers (and if you have too many, you can easily reduce overhead with relatively little lost value.) Buy those servers, and you either have to pay up front or commit to a lease that may have breakage costs. Additionally, if your service is growing at a material rate, there are inefficiencies around when you choose to turn on extra hardware. With colocation, you're probably going to do groups of machines at once (say once a quarter) and attempt to predict how many you'll need (naturally erring to the high side.) With cloud, you can provision new machines at any time _as needed_. It's great to do a set piece calculation and say colocation is cheaper, but you're ignoring the realities of doing business - that plans change regularly. That flexibility is one of the primary benefits of using cloud services. Ask most CEOs if they'd rather pay 300K now, or 400K over a year or two with a lot of optionality/flexibility, and I suspect they'll take the latter.