Is anyone else noticing that bare metal is getting unbelievably cheap? OVH is well known but there are now many vendors also offering crazy cheap bare metal hosting with <1hr setup times, etc. Compared to the popular virtualized cloud vendors it's a steal, especially when it comes to CPU, RAM, and storage. (Bandwidth tends to be about the same.)
If you do that with an IaaS, you're nuts. Your static assets (which typically represent the bulk of bytes served) should be served from a blobstore or a CDN, which are priced dramatically cheaper.
If your mp4s are served from an EC2 instance instead of S3 or CloudFront, for example, you're keeping warm by setting $100 bills on fire.
"Fair Use Policy
Use as much bandwidth as required: With all dedicated servers from serverloft, you receive a traffic flat rate free of charge. Here our Fair Use Policy applies, which requires a fair usage of all our resources as well as a reasonable traffic usage.
Therefore, in case the bandwidth exceeds 50 TB on a 1 Gbit/s server during the current billing month, we will decrease the bandwidth to 100 Mbit/s.
You will be able to monitor you current usage in the customer panel. We will also inform you via e-mail should you approach the 50 TB maximum usage. In this case you can purchase additional bandwidth for $10 per TB in order to extend your traffic usage."
So, 99 for the server and 50TB a month. Now if you want to max out your 1gpbs connection, lets say 50% of max (1gbps * 24 * 30 * 60 * 60s/2 TB ~ 160 TB, or a additional commitment of 110 * 10 = 1100+99 = grand total of 1200 dollars a month. How much transfer does that get you out of s3? First off, 160TB out of S3 each month, clocks in at 13227$ for just the bandwidth - not including the any storage. For the price of 160TB on dedicated, you get approximately 12TB on s3 (again without storage).
120TB out from cloudfront? 25693/month.
Now, one, low-end box might not be enough to keep everything going, but notice the price difference here. If you bought four "low-end" boxes you'd get 200TB of bandwidth included, and still be paying a lot less than for just the bandwidth on S3. It might even be cheaper to rent dedicated boxes set up as caching proxies, than to serve your data from s3/cloud-front...
Now, I'm not saying the cloud doesn't have merit, but just pointing out that the price difference is real.
If all you need or want is hardware, power, and bandwidth I would say you should definitely go dedicated or colo. If your business runs on the value-added services than you don't really have that choice.