Cloud based technologies are a win for small to medium businesses* because they are a more efficient and stable way to deploy hardware resources; the amount of hardware you need to ensure that there is always enough resource for a single website serving a million hits a day is more than a hundredth of the total resources needed for a hundred independent websites each serving a million hits a day, because the probability of them all hitting peak traffic at the same time is low, the probability of experiencing 100 independent hardware failures out of 1000 machines at the same time is far lower than experiencing 1 failure out of 10 machines, and because it is cheaper to host whole racks or data-centres of machines and secure the whole rack or centre than to host and secure a few physical machines.<p>The cost benefits of these efficiency gains outstrip the costs of vertical de-integration, allowing cloud hosts to make a profit and still be cheaper for small businesses than hosting their own servers.<p>However, by the time a business is large enough to run its own sufficiently large private clouds, it gets the benefit of cloud hosting, but can also remain vertically integrated, and so private clouds can have a cost benefit over public clouds where the cloud provided needs to make profits.<p>As more Free / Open Source software becomes available to make private cloud hosting easier, I expect most businesses with sufficiently large server deployments will choose to vertically integrate and run private clouds rather than using public ones.<p>* Note that I am implicitly measuring the size of a business by the size of their server hosting requirements. I'm sure this measure is correlated with profits and revenue, but some companies with, say, high profits might not have many servers, and so would be small business for the purposes of this comment.