When you need lots of compute power. Typically most cloud providers will burn a massive hole in your account if you're doing something intensive, video processing for example, at which point it would be cheaper in the long run to either use dedicated servers, or co-locate your own build. Jeff Atwood has written an article about this . He basically comes to the conclusion that in the long run BYOH (Bring your own hardware) is cheaper than relying on cloud providers. Of course, the trade off being that you would then need to be responsible for managing said hardware.
 - blog.codinghorror.com/the-cloud-is...
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