10th Magnitude's CTO, Steve Harshbarger, explains how the cloud makes economics better by giving us more options:
We know we could build every feature of a custom application from the ground up. We get ultimate control of the result, but often the cost or timeframe to do so is prohibitive. So as developers, we look to incorporate pre-built components to speed things along. Not only that, we strive for better functionality by incorporating specialized components that others have already invested far more resources in than we ever could for a single application. As a simple example, who would ever write a graphing engine from scratch with so many great ones out there? So, build is rarely the whole story.
What about buy? I think of “buy” not in a strict monetary sense, but as a moniker for code or components that get pulled into the physical boundary of your application. This includes both open source components and commercial products, in the form of source code you pull into your project, or binaries you install and run with your applications’ infrastructure. We all do this all the time.
But the cloud brings a third option to the table: rent. I define this as a service you integrate with via some API, which runs outside your application’s physical boundary. This is where smart developers see an opportunity to shave more time and cost off of projects while maintaining—or even increasing—the quality of functionality.
He also lists our top-10 third-party "rental" services, including Postmark, Pingdom, and Arrow Payments. (I'm using a couple of them as well.)