Dare Obasanjo quote Debra Chrapaty (via Tim O'Reilly) on what's coming down the pike with "Web 2.0":

People talk about "cloud storage" but Debra points out that that means servers somewhere, hundreds of thousands of them, with good access to power, cooling, and bandwidth. She describes how her "strategic locations group" has a "heatmap" rating locations by their access to all these key limiting factors, and how they are locking up key locations and favorable power and bandwidth deals. And as in other areas of real estate, getting the good locations first can matter a lot. She points out, for example, that her cost of power at her Quincy, WA data center, soon to go online, is 1.9 cents per kwh, versus about 8 cents in CA. And she says, "I've learned that when you multiply a small number by a big number, the small number turns into a big number." Once Web 2.0 becomes the norm, the current demands are only a small foretaste of what's to come. For that matter, even server procurement is "not pretty" and there will be economies of scale that accrue to the big players. Her belief is that there's going to be a tipping point in Web 2.0 where the operational environment will be a key differentiator

There's a lot of truth in that, but at the same time, it depends. If your model is to handle a Digg/MySpace size audience, sure - that's a broadcast model (yes, I know that there's narrowcasting within that broadcast model). However, not everyone is after a huge audience - many people are after a niche audience right from the get go, and thus don't have huge scalability (or power) needs. If all you need is a handful of servers, location isn't going to be a huge problem. Based on what I see on the web right now, for every huge service like Windows Live, there are tons and tons of niche services that are going after a much, much smaller audience.