AWS obviously does the same but better. That's why they are so rich. Their cost is a tiny percentage of their revenue. They buy cheap servers, and then run lots of vms on them. Each of which delivers 10s/100s of $ per month. That server pays for itself in revenue within weeks/months. And it will be in service until it stops working which could be over five years. Same with storage, networking, gpus, etc.
They've spent years optimizing everything so their monthly costs are going to be much lower than what these guys managed on their first attempt. They'll be using less energy. They run their own internet backbones and infrastructure, they design their own hardware and source components directly from the best suppliers, they have exclusive deals with energy providers, etc. Every thing these guys did, AWS does way better. And yet they charge 40x more. AWS at cost price would probably be 60-80x less than what they charge; if not more. Cloudflare undercuts them a bit because they are smaller but they can do the same things. So do MS, Google, and everybody else.
This market is ripe for disruption. There should not be a need to shovel hundreds of billions per year into AWS revenue for the industry. The same business operating at 20% margins would be a game changer. And most of this stuff is commodity stuff. Why is there not more competition in this space driving pricing down aggressively? What's keeping competitors off the market?
There's a long tail of smaller clouds: Digital Ocean, Oracle, IBM, Linode/Akamai, not to mention server providers like OVH and Hetzner, and not to mention Chinese clouds like Tencent and Alibaba (which both have US regions), not to mention PaaS providers who run on their own hardware like Fly.io.
I think it's very hard to make a claim that the market is not price-competitive. The problem is that most decision makers don't actually prioritize price, they prioritize support and the larger ecosystem. It's easy to find engineers with experience on the big 3 clouds and they will be able to pick up where the previous engineers left off. No CTO goes to sleep worrying about whether they being vendor-locked into AWS will result in catastrophic business failure tomorrow due to catastrophic hardware failure. There is a larger ecosystem - observability, FinOps tooling, cloud security tooling, managed databases, that are virtually guaranteed to support AWS, sometimes support GCP and Azure, and almost never support any of the other clouds.
It's questionable whether the current situation is really due to companies like Oracle and IBM being unable to compete on price and make strategic partnership deals to build out ecosystem support for their clouds. I think it's more likely that AWS/GCP/Azure "won" the cloud market, and that if regulators were worth a damn, they'd start to address the market concentration instead of ignoring it.
> This market is ripe for disruption. here should not be a need to shovel hundreds of billions per year into AWS revenue for the industry. The same business operating at 20% margins would be a game changer.
Honestly, I don't understand this line of thinking. You're not alone in it either, but it always reads so naive.
Like you can magically hand wave or it'd be so easy and get a competitor who can do it just as well and/or cheaper than AWS. But somehow these statements seem to ignore that you can't. Otherwise Digital Ocean would've, or cloudflare or <name-your-linnode-rackspace-startup>.
The industry funnels billions to become vendor locked in because AWS is simply that good - bar none.
Even Google kept considering killing GCP for years. Meta is going to burn a bunch more billions on cartoons that play in your glasses before they get into cloud hosting and the other existing competitors have huge issues crossing the chasm of "everything is an API" that AWS has.
> AWS at cost price would probably be 60-80x less than what they charge; if not more.
If you look at https://ir.aboutamazon.com/news-release/news-release-details... , it says in 2024,
> AWS segment sales increased 19% year-over-year to $107.6 billion.
> AWS segment operating income was $39.8 billion, compared with operating income of $24.6 billion in 2023.
So about 59% margin, relative to costs. Everybody undercutting AWS is likely doing so at close enough to 20% margins that it makes no sense to fund a startup in the same space.
AWS is everything from GPU farms and AI services to S3.
I would be shocked if S3 had less than a 100% margin at sticker price.
These guys had one of the most important prerequisites to make going on-prem easy - they didn't care about cross-site or reliability.
> AWS segment operating income was $39.8 billion
keep in mind that cost there is likely to also be including personnel. probably a significant fraction if you consider how many employees amazon's aws division has.
Inertia. It's the new 'nobody gets fired for buying..'
A previous project I worked on had relatively little traffic, and AWS costs were rather insane for that.
I proposed exploring OVH or DO and probably get costs down to 2 digits per month. Upper management would hear nothing of it - AWS was what they wanted, costs be damned. They were more protecting their own jobs than making a technical decision, I think.
AWS costs are insane for every project.
> Upper management would hear nothing of it
No one knows how to plan ahead any more. It's all "agile" and hardware (and budgeting for it) isnt something most in management are capable of doing any more.
There is also then justifying the CapEx on a 5 year amortization schedule... the thing is even if you borrow that money at current rate (7 percent) you can still come out far ahead of AWS... It's a lot of math, and a lot of accounting (and the accountability that comes with it).
Your average CTO just doesn't have these skills.
Unless the savings would be more than 100k Eur / 300k++ USD (I.e. total cost of one employee, it's not really worth it. Even then, moving to new infrastructure carries high risk for business disruptions which can cause an even bigger dip in revenue.
The cloud providers have definitely optimized their pricing for maximum profit extraction. Costs are high, and in many cases it's not high enough to actually warrant changing infrstructure to cheaper alternatives.
Sticking with AWS / Azure / GCP carries other benefits, too. You're more likely to find engineers who are experienced with those cloud platforms over, say, OVH.