Depends on when providing a web service with an SLA is your core competency. I'd readily use S3/EC2 for running Hadoop/doing backups/rapid prototyping (and use

Depends on when providing a web service with an SLA is your core competency. I'd readily use S3/EC2 for running Hadoop/doing backups/rapid prototyping (and use a CDN for static hosting) -- but if your core competency is providing a web service with an SLA* you want to control as much of the stack involved in that process as possible. Of courses in these cases you'd want to outsource as much of the lower-level work as possible (e.g. having a third party company rack and stack and provide you with a serial console). * Not all web applications require an SLA, early adopter consumer applications, e.g. Twitter would be an obvious example.