To be fair, cloud storage is a huge step up in terms of reliability for small to medium size startups where the capital necessary to roll out their own hardware

To be fair, cloud storage is a huge step up in terms of reliability for small to medium size startups where the capital necessary to roll out their own hardware and people necessary to maintain that hardware is not within their budget. A lot of startups resort to very risky setups because they can't afford increased reliability, and Amazon and Rackspace seem to solve that problem. For a larger company, it makes more sense to expend capital on reliability because they can afford it and they want to hold the ax when something bad occurs.