Cloud-based hosting can do amazing things. When companies need its unique benefits, there is little that can touch it. However, for many organizations that have more stable and predictable needs, transitioning to the cloud can be an expensive mistake. With a well-defined set of applications and needs, a managed dedicated server can provide better performance with lower cost, bucking the conventional wisdom.
A cloud server is essentially a virtual private server with a little something extra behind it. When a company decides to go the infrastructure-as-a-service (IaaS) route and provision a cloud server, it frequently ends up with what looks like a virtual private server (VPS). However, unlike a VPS, a cloud server is billed on an as-used, on-demand basis. When a cloud server doesn't get used much, it can be very inexpensive. However, if a company experiences a demand spike, the cloud server can quickly ramp up. Instead of just taking over an entire machine, the cloud service could end up spanning multiple machines, offering almost limitless power. The user simply pays for what it needs.
Cloud servers are frequently used by companies that experience demand spikes. An e-commerce site, for example, might use them to handle heavy demand for promotions and sales or on heavy shopping days like cyber Monday. Media companies might use them for video streaming in the evenings when more people are trying to watch television. By using the cloud, the companies that experience these spikes don't have to maintain an extremely larger data center filled with servers. Instead, they just order the IaaS that they need and, when the demand spike goes away, the additional servers and additional cost does, too.
There are two key drawbacks to the cloud. The first is that someone has to pay for the additional infrastructure that cloud-based providers have to carry. For the cloud to be able to scale to handle demand peaks, the equipment needs to be there and the bandwidth needs to be provided. These costs get built into cloud pricing and can make it more expensive than it seems. The other drawback to the cloud is that when a company isn't taking advantage of the scalability and elasticity, it could end up running on what is basically a virtual server, sharing its hardware with other companies, just like on a VPS.
When a company doesn't have to worry about significant demand spikes, the flexibility of the cloud gets wasted. In those instances, a dedicated managed server can provide better service at lower cost. Since the company has its own hardware, it can be sure that it will have control over what happens with it. It also just pays the cost of the server that it uses, instead of having to pay for additional infrastructure that ultimately benefits other organizations.