Many bloggers are asking if self hosted Tumblr will ever be possible. Tumblr is currently only hosted on the Tumblr servers, and the shared server environment is sluggish and slow to update during busy times. Tumblr is especially frustrating for the developer, sense Tumblr themes must be developed and tested on the Tumblr servers unlike WordPress themes. The advantages of Tumblr hosting is the Tumblr functionality. Tumble's social environment, similar to WordPress.com, can only occur on the Tumblr hosting the way it is now.
Will Tumblr ever create a self hosted version?
It would be possible for Tumblr to create a self hosted version with different features, similar to WordPress.org, but I doubt this will happen. David Karp makes it clear that the social atmosphere is a key characteristic of the Tumblr ideal.