> I wonder if there will come a cloud provider that solely uses consumer grade compute, local storage, and internal networking, with some kick ass network connectivity and steal the cloud provider show?!

Forget consumer grade: even normal Dell/HP/Supermicro stuff is a PITA to run at datacenter scale. Most major cloud providers roll their own machines for a reason.

I'm guessing any hardware savings would be evaporated by increased labor, power, and footprint costs, likely making you more expensive than other providers.