It's the utilisation... dude
Disagree, because classic hosted servers need to be sized for some imaginary "Peak Load", resulting in very low average utilisation on the equipment.
The elasticity cost overhead associated with cloud computing minimises when enough users average out the loading.
Thus at some usage point a cloud will be cheaper to run than classic hosted.
I expect this to be very soon - rising power costs, cheap RAM, Core i7 chips, tuned virtualisation technology, combined in-house & external clouds, cold standby of cloud resources, ...
By way of example GMail costs about 1/3 that of other email solutions, in large part to efficient hosting. Customers will naturally head to the lowest cost equivalent service, and that will just happen to be a Cloud provider.