> is using one of the major cloud services cheaper
> than running your own?

Depends on the size and to some extent the distribution. Above a certain size (and this varies based on the mix of memory, storage, and CPU cycles) it is cheaper to run your own stuff in a space leased from a data center. However that size generally has to be achieved at every data center you want to run in. For example, if your function was that it saves money above size 10, And you need 7 units in the US and 7 units in Europe, it is probably not cost effective to run your own even though your up to 14 units of capacity, but if you're running 15(US) and 12(EU).

That said, you still have to have the the operational expertise to run it and with that expertise will come an understanding of the actual costs. For example, at Blekko we were running 1500 machines in a data center and had just over 12,000 hard drives. Those drives are going to fail over time so you need build process around continually renewing the drives. You assume that you'll be able to get some replaced under warranty but you should also simply depreciate the cost of drives over 3 years. So you spend $110 on a drive, you depreciate it at cents per day. That is an "expense" you incur as you buy replacement drives. So your storage is "costing" you $36,000/month ($0.10 * 12,000 drives * 30 days). At the time it was the 2TB generation and our system used simple triple replication for data protection so it represented 8PB of data protected storage, of which, at any given time we were utilizing roughly 5PB. S3 from Amazon [1] is .021/GB per month so 5 petabytes (just what we were using) would be $105,000 per month (so roughly triple the cost). And there is the network 'in/out' costs which raise the prices further and you don't pay for your own storage. Most of our storage management costs (detecting bad drives, reformatting, scheduling for RMA) was done automatically but it did take an data center engineer one day each weak to work through the list of drives that had been determined to be bad, swap in replacements from the 'incoming' drive box, and put the outgoing into the 'rma' box (40 drives in the box) and once the outgoing box was full, print out the list of serial numbers and generate a standardized RMA to Western Digital and to then put the shipping label on the box. So in addition to the depreciation cost you add 20% of the cost of a date center engineer who is doing the mechanical work of moving dead drives out.

So you can cost it out this way for your own infrastructure and figure out which is cheaper, and for a lot of people it will be cheaper to run it in the cloud because you really don't need multiple petabytes of data or thousands of cores on line or terabytes of RAM. And some people build their systems in efficiently so that they are spending way more on people keeping them running than they might if they had designed them differently. glindahl had honed a set of scripts and tweaked Nagios bits that made running lots of machines fairly efficient but not everyone has someone like that on staff.

But the place where it is a real win, and I think this was the economic story that got Evernote to move, is that when you downsize your infrastructure needs it is trivial when you are in the cloud, and it is non-trivial when they are your own assets. Data center leases are generally multi-year and they are loath to let you sublet space or reduce space.

Since Evernote has been shrinking this makes a lot of sense for them, when their user base shrinks their costs shrink with it. And that is the "killer app" for cloud based infrastructure.

[1] https://aws.amazon.com/s3/pricing/