If you do the math, CPU in the cloud is just not cheap. Storage in the cloud may seem cheap, but that's only because enterprise storage is so expensive relatively speaking. If you're willing to put some time into it you can get 80-90% of "enterprise" functionality from your cheapo storage as well,thereby beating Amazon's economics.
But cloud is easy to provision and good for folks that don't want to deal with operating systems, networking, security, grumpy middle-aged sysadmins (that'd be me) etc etc.