That is very odd and doesn't mesh with my experience at all. Usually the server cost is linear with growth (more or less) so if the per unit cost is fixed (more or less) then how on earth would such a swap occur.
Depends on the size. When operating your own servers, you need to recreate all that cloud providers do for you:
- maintain the physical machines
- build or rent data centers
- have people to operate, maintain, upgrade the machines
- set up, build, maintain, update, upgrade infrastructure for your projects to work on your machines
All these costs are not insignificant when you need more and more machines. And as it was mentioned above, they don't do well when demand is variable: when you no longer need as many machines, you can't just decommission them. When demand spikes, you can't install new servers instantly.
Hybrid approach brings its own problems: your software and your infra has to work on your own servers and in the cloud, which is a harder feat to pull off than it seems.
