Most applications/companies don't need to scale to hundreds of servers, let alone thousands... Having the number of employees to setup and manage that level of infrastructure has a not insignificant cost. If you can have your dev+ops team not have to have as much specialized knowledge and get more done with AWS, Azure or similar, then there are definitely costs to be saved. Of course the more of AWS/Azure infrastructure you leverage the more locked in you are...

I'd like to see a similar analysis for say 50-100 servers, and see if AWS really costs more vs. colocation when you add in the resources to setup and maintain the infrastructure.