Disclaimer: I work on a cloud networking product.

In the locations where there's more traffic, and we need more servers, there are more cost effective providers, but there's value in consistency.

Elasticity is nice too, we doubled our instance count for the holidays, and will return to normal in January. And our deployment style starts a whole new cluster, moves traffic, then shuts down the old cluster. If we were on owned hardware, adding extra capacity for the holidays would be trickier, and we'd have to have a more sensible deployment method. And the minimum service deployment size would probably not be a little quad processor box with 2GB ram.

Using cloud for the lower traffic locations and a cost effective service for the high traffic locations would probably save a bunch of money, but add a lot of deployment pain. And a) it's not my decision and b) the cost difference doesn't seem to be quite enough to justify the pain at our traffic levels. But if someone wants to make a much lower margin, much simpler service with lots of locations and good connectivity, be sure to post about it. But, I think the big clouds have an advantage in geographic expansion, because their other businesses can provide capital and justification to build out, and high margins at other locations help cross subsidize new locations when they start.