Theoretically cloud providers should be able to provide both the infrastructure and managed services much cheaper (due to economies of scale) than a single company running their own.

The question is how much of the savings end up in whose pockets, or whether the price at which they actually sell exceeds the TCO of running it yourself.

Outsourcing at least the commodity part (dumb hardware) seems reasonable, and migrating to a competitor doesn't seem like too bad of a BANTA if you aren't locked in.