Cloud computing is strong, flexible and also cheap. Ok, it may be not very cheap. In fact, cloud computing is also expensive sometimes. However, it all depends on your view, demand and situation.
Recently, I read an article about this theme. It tells that startup companies stop using cloud hosts because they are expensive, and meanwhile the performance, memory and storage of standard physical servers have been improved greatly than before. 
It is the fact absolutely. Cloud computing, especially large cloud computing like AWS, Rackspace, SoftLayer, Aliyun and so on are powerful, and they also have other added value other than the low price of CPU, RAM and disk.
Meanwhile, for special cloud servers, their configuration would not cost much less than the physical servers.  Take Dell for example, we usually buy server of 64-128GB 32core (with hyper threading function, may be equal to 20-24 physical cores) and 6-12TB disk, and the price is about USD5000. Of course, you still need to buy data center space, broad band, and many other operation support systems.
To achieve the similar configuration, if using AWS, we need two QuadXL, each costs USD1.6 per hour or USD1150 per month, and we still need to take storage and so on into consideration, so the cost of this kind of system can easily reach USD3000 per month.  Rackspace is also similar, but the cost is totally different. If you have 5 this kind of systems, you need to spend USD25, 000 and USD2500 per month (the expenses of data center and so on), but it will cost only USD15, 000 to use AWS.
Additionally, cloud servers also have other advantages, like geographical advantage, special performance features, extra service like DBMS, load balancer, the most important flexibility, and so on. After all, once you have spent USD25, 000 to buy a server, it is hard to take your money back. Moreover, AWS can keep the examples and other methods, and can also help you to reduce 50% or more expenses through appropriate scale, distribution according to needs, and other methods.
Therefore, all in all, it deserves the spending. You need only to make clear your needs, and pay attention to the actual value cloud provides. Cloud can bring practical value especially for the startup companies and medium and small-sized systems.
All these will make you want to use private cloud; surely, here you can compare the costs of cloud and physical hardware. Based on this reason and other more reasons, cloud technology will establish a private cloud every week in China. With the same cost, the private cloud will have higher performance and stronger ability than public cloud. However, from long term, due to the above characteristics of the above mentioned public cloud, these companies will still develop to apply public cloud as the workload increases.
We estimate that we will see many hybrid systems in future, which are possibly based on OpenStack, because you can combine the advantages of both: physical servers cost less and have strong extension performance, and the public clouds have high flexibility, strong function, many service varieties, and great development potential. In this field, AWS and Rackspace are developed fast, because customers like these hydride systems, which have low cost, good safety and many other advantages.

All in all, cloud is good, and is cheap for most of the time. For many people, all characteristics, flexibility, the cost of real system construction and so on should all be taken into consideration to decide whether to use cloud. In some circumstances, it is reasonable to use private cloud or hydride cloud. Customers should comprehensively consider all their own needs and all feasible plans before start to construct and extend their own operation platforms, and then develop them.