I would say that should always factor into these equations, and I further would say that most companies large enough to worry about these kinds of decisions are

I would say that should always factor into these equations, and I further would say that most companies large enough to worry about these kinds of decisions are indeed factoring those things in. The cloud vs colo discussions have been done before on HN, but I still say the decision of one versus the other basically boils down to a relatively simple if-else/switch statement: If size of company is small and no sysadmins, cloud. If size of company is medium and sysadmins then cloud or colo based on due-diligence. If size of company is large and sysadmins and you need very high uptime then colo (Unless you're willing to spend a gazillion dollars for several access zones on EC2). Obviously there are going to be lots of if/else chains but you get my drift I imagine. Now if you're a small start-up and have a likely outcome of tons of scaling needed in short order, your best bet might very well be scaling with the cloud and moving to hardware when you're more established (and if it makes sense from a cost benefit analysis).