[jdhore]

Running your own servers costs more for engineers/devops/sysadmins, but in terms of how much you pay to your provider, hosting your own is FAR cheaper if you have more than 1 or 2 instances. You can get a 10U GigE unmetered colo for $550/month from this place on WHT: http://www.webhostingtalk.com/showthread.php?t=1200231

I'm fairly sure that if you have 10 instances at EC2, you're paying FAR more than $550/month.

The other benefit EC2 gives you is quick/instant deployment of even really high-end hardware if you quickly out-pace your current capacity and need another box ASAP, whereas even if you were doing dedicated servers, it still takes a hour or two for them to put your new box in a rack and get back to you with the IP and such.

[fusiongyro]

I did the math a couple years ago and dedicated hosting with or without colocation was about 10x cheaper. Maybe things have changed, I dunno.