Agility matters more than bandwidth
Most of the marketing blurb here is about inter-rack bandwidth, which isn't that much of an issue except when you are moving VMs. If there are problems with the web app on rack1, the database on rack2 and another instance of the webapp on rack3, that's a problem of the placement tooling and client APIs, not "cloud" per se. If your API let you say "3 servers with 15 mpbs between them" the resource manager can put them close.
Where VM-hosting clouds do have problems is dealing with change. Your routing tables are no longer fixed, you have many more VMs, each with a mac address, than you have ethernet ports. You need to update route tables as machines come and go, and if you have redundant switches, you need to keep those updates in sync.
These are the problems that cloud infrastrastructure providers have, and if the switch vendors don't acknowledge that, then it shows they don't understand customer needs.