It may cost that much to buy that capacity, but it costs a lot more than that to run the large scale organizations (CAPEX/OPEX) that build and buy these services. You're not just paying for a pipe, you're paying for the corporation.
You are paying their profit margin, yeah.
It is wildly overpriced, no matter how you look at it. Operating costs even when done on a much smaller and more inefficient scale than for AWS do not make the total cost for incremental bandwidth usage THAT much larger.
Or they start getting older, don't keep the skills sharp enough, and die off. Now you've got to painfully convince them to help you train a new employee to keep the show running, or pay 10 fold your savings hiring the smartest in the world to fix it. But the systems too big, and by the time it's on the "latest and most popular cloud architecture with proprietary systems", you're irrelevant.
But you're right, they make the companies current CEO/CTO look good by cutting costs in the beginning, so who cares right?
I was hoping somebody would bring up Netflix. Netflix is AWS's poster child and they know it. They need AWS still just as much as AWS needs them. The statement you just made proves that. They will do everything up to and including take a loss to keep Netflix around. I can assure you that your company will not be getting the same price quote or technical support that Netflix does unless they can bring them just as many sales by being a status symbol and marketing tool for them.
There seems to be a trend of people thinking "AWS is my friend". No. They are a company, and they exist to make money. Have we not all been bitten enough by this thought pattern and loyalty to learn the lesson of "stay flexible"? I'm not advocating that AWS is done away with entirely and nobody should use them ever. I'm advocating that putting your entire stack into their system is a bad idea and that using "black box" software as little as possible is a better approach. When it was just EC2 it was fine, you can build your stuff on an EC2 box with your favorite flavor of *nix and quickly throw boxes up elsewhere if things go south. Now I'm seeing companies put entire critical infrastructures off on Amazon pre built services like they've never seen a tech company go under, or a fad die, or strongarming with brute power.
This is a complete non-issue for users of AWS unless they are essentially trying to resell AWS services.
> companies that have had their physical goods ideas stolen and are now mass produced at Amazon
AWS is not Amazon, they do different things - see my GP comment replying to you. I also wonder how many times this has actually happened (stealing ideas) in reality, versus the companies simply having an unsustainable business model, or an obvious product. It sounds like the classic case of looking for someone to blame for their own incompetence, and choosing Amazon instead of some other huge corporation or the government, which are also common scapegoats...
If it suited their strategic interest, sure Netflix could get the shaft. Is that scenario likely to play out, seems unlikely. Netflix is one of AWS earliest and most prominent customers.
I would imagine Netflix would leave Amazon long before Amazon shifts their strategy to take out Netflix.
However, AWS is a different thing altogether - it is a set of services that can be used to run parts of your business. Now, if your business involves simply reselling those services, or is predicated the availability and pricing of one of those services being a major part of the value for a service you sell (i.e. the value you add is marginal, with the majority of the product or service's value residing in the service AWS provides) then you are again in a situation where AWS may also decide to offer the same service, and will probably be able to do so more cheaply and profitably.
Again, this would not be a malicious act or directed attack on your business through inside information, and it seems naiive to assume so. You must have been able to determine a market existed and a need could be fulfilled profitably by providing this service, there is no reason a company like AWS could not reach the same conclusion with its vastly larger amount of resources. The possibility of this sort of thing happening should have been determined during due diligence and market analysis anyway, so it should not be a surprise if it happens.
But companies in traditional lines of business using AWS to save money, or using AWS to build a product where the value provided to the customer is inherent in the service provided, not the infrastructure used, are going to be fine. Nobody worries about the electricity company stealing your idea for a product run using electricity...