Server hardware is reliable. For connectivity price-wise I think the sweet spot presently is to host own hardware in the data center and have a system administrator that lives not far away. I worked before for a company that was doing things like that while having millions of active users. It costed them at least 5 times less then it would be with a cloud provider. And then when they got a better deal with another data center the migration was not much more complex then moving server boxes in a van and changing ip addresses for load balancers.