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Past article 'Coding Horror: Scaling Up vs. Scaling Out: Hidden Costs' http://www.codinghorror.com/blog/2009/06/scaling-up-vs-scali...

Although it's not quite the cloud, one of the founders prefer vertical stacks due to several reasons including licensing costs.

You scale out hardware layer by finding optimal hardware and scaling out on that.

The major problem with their 'scale out' chart is that that particular hardware is far from optimal hence costing far more then it should.