[jwr]

You forget management costs -- someone has to deal with this storage, service the computers, replace the drives, add them, add additional computers, etc.

[jasonkester]

Indeed. If your business relies on keeping 1TB of data alive, you're going to have dedicated staff keeping an eye on it.

So now, you're looking at ~$2k hardware + $150k salary for your dedicated box watcher.

Compare that to $3k for S3 where it's their problem to keep your stuff backed up and deal with hardware problems.

It's a no-brainer if you ask me.