Swings and roundabouts..
This whole Cloud thing has always seemed like a case of Swings and roundabouts to me.
There are advantages and disadvantages to hosting things in the cloud..
Easy to manage large fleets of machines, and deploy new ones as needed.
Can reduce storage and backup requirements. While the user sees a hard drive with Windows and his/her apps on it, the bulk of what they see is shared amongst potentially thousands of other VMs, and their VM only stores the difference. It's certainly a lot more efficient to have 1 full VM and 1,000 linked clones (for the users) than it is to have 1,000 physical computers backed up. Yes, I know each user still needs a physical computer, but all they need on it is the software required to access the VM. This can be hosted on a PXE server, so the physical computers don't even need drives.
Can use older computers to run software, as the hard work of actually running the software is done by the cluster running the VM. Useful if a company has an ageing fleet of computers they are unwilling or unable to replace.
You are relying on a lot of hardware and software to get service to your users. Whereas to use a physical machine, you need the machine, power, a working network (this is optional) and also at least one functioning domain controller (If you use Active Directory or other directory based management system). With a locally hosted cloud system, you just add a lot of servers to that. With a remote hosted cloud system, you are also reliant on several external telecoms companies, as well as the company running the cloud service. As such, your shiny new VM infrastructure could save a lot of money. It could also be taken out if your cloud provider has problems, or even ends up bankrupt.