We outsourced the physical data center but owned and operated the servers. There would have been no issue with other people's stuff running, and the company ha

We outsourced the physical data center but owned and operated the servers. There would have been no issue with other people's stuff running, and the company had even considered it (for simulations, etc.). Our costs were much higher than Amazon's, I suspect. While we might have bought a couple hundred servers at a time, Amazon probably buys thousands. They can buy bandwidth cheaply and probably even power. Open standards are nice and all, but worrying about running a datacenter stinks. It's a huge management overhead among the zillions of other problems. Even signing the contracts to have it managed is a pain. "Locally-run clouds can rent their capacity back out" I'll buy capacity from Amazon, but probably not from Joe Blow. More management overhead to sell capacity back. There would have to be an intermediary, but even then it would be a pain. Amazon's lock-in/switching costs are mild problems compared to the issues of dealing with one's own datacenter. Everybody I worked with would have much rather spent their time making the apps better.