There are also many shades of gray between "big cloud" AWS/Azure/GCP and "my own rack" bare metal hosting.
(Those were all firsthand examples; I'm not saying everyone needs cloud providers, but there are reasons beyond "really good salespeople" that people opt for offloading those logistics.)
You dont even have extra organizational overhead. Every cloud first company has a head of devops sitting in the chair where head of infra would be. They somehow wind up with like half the staffing anyways compared to running bare metal.
Also building high complexity systems that require a big expensive cloud engineer staff gets you status and visibility. In a tight spot you can still blame AWS for problems.
(Reality is not quite so bleak as people are not completely cynical)
Also like I said: physically racking only makes sense if you are huge. Managed bare metal is a whole market category and it’s spectacularly cheaper than big cloud for most work loads. For bandwidth it’s like 1000X cheaper. That is not an exaggeration.
Or something as stupid as, "vendor requires $50 failed DIMM replaced under warranty to be returned by UPS instead of chucked into the e-waste bucket, but UPS cannot pick up from DC because the driver can't be bothered to ring the bell on the DC gate".
That one alone probably resulted in our longest ever ticket.
The physical world sucks.
There are also many other alternatives. Example: VPS providers like Vultr which have expanded to offer more traditional "cloud" features like object storage, load balancers, managed DBs, etc. Their pricing is way more competitive than AWS, especially when you consider bandwidth.
There’s a sort of arguable sweet spot where someone motivated and knowledgeable can manage their own hardware, even if it’s just rented from Hetzner etc. But that just doesn’t scale.
Once you do try to scale that - not just the hardware but the staffing that’s needed to avoid a bus factor of 1, to ensure the required uptime especially if it needs to be 24x7, to handle disaster recovery, failover, security and compliance issues etc. etc., you quickly run into all the reasons that infrastructure management services and other computing services - i.e., cloud - have won out so definitively.
If you’re small enough that none of those things matter very much to you, and knowledgeable enough to run your whole system yourself, and have the time and inclination to deal with it, go for it! But such people are outliers who are really indulging a hobby more than anything else. It generally makes extremely little business sense.