How much would you have to pay a sysadmin to install, maintain and monitor an in house hosted server ? How much would you have to pay to have daily snapshots of your instance ? And what do you do with the old server if there is a change in business strategy and you either need a much bigger server, or no longer need this server at all.
Are you suggesting that someone running in the cloud suddenly has no need of an ops team? This is the danger in drinking the DevOps Kool-aid, assuming that because a developer can manage to not completely fuck-up their dev box they are somehow proficient enough at system administration to manage cloud infra.
Daily snapshots? For the prices listed you could have an actual hot spare running 24x7 and still save money. This also makes surge-up easier and if you ask nicely a lot of decent dedicated hosting providers will let you shrink without holding you to contract terms.
The comparison above is not AWS vs an in house hosted server. It's dedicated bare metal. If something happens with the hardware on those dedicated servers, the hosting company handles it for you.
And even most dedicated servers can optionally come preinstalled with the OS.
