What Isabel said. Seriously- Microsoft needs to own the service level and take advantage of web scale out architectures if its going to compete with Google. Zimbra is exposed to the same issue because of its OEM strategy. Web apps need web performance, and hosted apps just don’t offer that. From a third party perspective you really can’t compete against web scale volumes for hardware purchasing. eBay, Microsoft, Google et al. From a customer perspective don’t be fooled by AJAX and angle brackets. If its a web app it should perform like one. If you want to host the app locally knock yourself out.
disclosure: parts of Microsoft are clients.