Because servers are physical machines. Virtual machines, instances, etc are not servers per se. Servers traditionally == physical node.

Source: 15 years in ops

With 2005-style physical machines you know at least that you can rely on performance. Storage is local and CPUs are used by no-one but you.

If you know that you have a rather steady load, dedicated servers can be far cheaper than any "cloud" offer.

Slightly OT but rumors are Hetzner is working on a cloud offer: http://www.hetzner-cloud.de/ [german].

Although I doubt that they can compete with AWS, Azure, GCE & Co.