> Dealing with server infrastructure isn't business differentiating
I agree, for most businesses no it isn't.
However, saving on cloud hosting costs to replace them with a handful of dedicated servers in different data centres can make a large difference to costs, depending on what the cloud usage is. For a funded rocketship startup with lots of free AWS credits it makes sense to use AWS; for a steady state or long-term low income business, not so much.
Those costs can make all the difference to a business if the cloud rental is creeping up to look comparable with salaries.
I've used a combination of dedicated and cloud hosting for a long time. In general the dedicated systems are so much cheaper for the same amount of bandwidth and compute, and you can run VMs on them with great performance, so you can run everything interesting inside VMs and a lot of the arguments around upgrade downtime have completely gone away.
With some cloud to assist, you can even use cloud temporarily to cover the downtime for major upgrades such as replacing hosts or reconfiguring the cluster network.
99.9% uptime with excellent bandwidth is easily achievable this way, and you can completely avoid user-facing downtime due to planned upgrades, with a bit of planning around DNS and IP transitions, VM migration, overlay networks, things like that.
Sometimes at much lower opex cost (100x) than the modern cloud-recommended equivalents, although it takes knowledge and time to ensure it.
If you have enough redundancy and occasional infrastructure stress testing, a similar level of "optimise for sleep" is possible as with cloud deployments. If you care about this (not every business does), it does take some work and knowledge to produce and verify hot redundancy, and of course there are costs.
Things will go wrong, but they'll tend to be at the level of things running inside VMs and containers, rather than hosts failing. The same things which go wrong with cloud deployments anyway.
The cloud can be used alongside dedicated to provide some of that redundancy and extra scaling. Cloud is rented in small units of time, so you can use cloud as "free most of the time" cold-backup service, and if there's a burst in traffic beyond what the dedicated systems can provide, or if you want to temporarily improve geographic locality for a service.
It might seem wasteful to rent larger dedicated services rather than cloud-as-needed, but the cost differential has changed in the last 10 years to favour the former more than it used to.