For sure, I think you can often save a decent amount of $$ with dedicated hardware. It does have downsides of course...

If your demand is 50% stable 50% fluctuating (say some base load + a big spike at US prime time), I still think you can win with a hybrid cloud... i.e. serve base load from a COLO, and serve spike load from the cloud. That does mean you need to configure at least 2 networks, but not a terrible idea from a DR standpoint anyway (Main DC fail? Push a button and run off the cloud until it is fixed)