In addition to what others have already mentioned, there are also benefits specific to using cloud services by companies like Amazon, Yahoo, Google, Microsoft, etc.
Despite what some might claim, self-hosting is not inherently "safer." In most cases, it's quite the opposite actually. This is because most small-to-medium-sized companies do not have the resources to provide the level of reliability and redundancy that mega-corporations like Microsoft or Amazon can. Unless you are hosting source code for a top-secret defense project or other projects where the threat of espionage is very real, the greatest threats to your code and your business are more mundane things like server/network downtime.
- Redundancy: Cloud services provide levels of redundancy that most businesses simply cannot obtain on their own. This includes data redundancy (back-ups/RAID), hardware redundancy (components/equipment), and geographical redundancy (multiple server locations across the globe). If a natural disaster hits your city, is your data going to be safe?
- Multi-tenancy: Each small business by itself cannot afford 24/7 support staff and multi-million dollar equipment. But pooling their resources together through a Cloud service affords them (through centralization and better resource utilization/higher efficiency) access to a much higher level of service.
- Security: Related to multi-tenancy, by centralizing the data of thousands of businesses, this allows security resources to be much more tightly focused.
Lastly, it should be noted that most commercial hosting providers offer co-location and dedicated hosting. And even cloud service providers allow customers to configure their "server" however they want, and installing/running whatever applications on it they want. So you can have a great deal more freedom than that offered by $10/month web hosting.
answered 2009-04-06T00:38:39.740