For a small or medium sized retailer wanting a database backend for their e-commerce website, cloud based database hosting is perfect. They'd be fools to invest $$$,$$$ to stand up their own server and another $$$,$$$ to hire an in-house DBA / SYSADMIN. I completely understand why a start-up would embrace a 3rd party cloud hosted database platform.

The SOAP based SOA platform is appealing to applicat ion developers, but it actually isn't as efficient as straight TCP/IP protocal and tabular data streaming.

http://blogs.technet.com/b/dataplatforminsider/archive/2009/03/10/what-s-next-for-sql-data-services.aspx

Also paying per GB for bandwidth doesn't seem benefitial for an organization wanting to host a multi-TB sized data warehouse. Of course those details vary by provider and providers can offer several different protocol and pricing structures.

For large organizations that traditionally have had a substantial IT department, it seems to me that deploying databases to a cloud based service provider would yield a good ROI in the short term, but might ROI may decline in the long term. It could turn into something like the old in-house programmers vs. outsourced programmers dilemma, where going forward the pedulum will swing the other way whenever the organization gets a new CEO.