Yes, Linode beats AWS when it comes to price. On the other hand, Linode's offer is incredibly basic and simplistic. AWS offers service after service that Linode simply doesn't and realistically cannot.
Sure, you can emulate a subset of these services (and a subset of their features) using open-source software but at what price ? That's the major flaw in your reasoning. Getting to the point where your installations are as stable and reliable as AWS', given a large stress on the system, will cost you a lot of money and time. Directly comparing the cost of hardware access is ignoring other costs and headaches that are not very easy to estimate.
There's a market for a service like Linode and there's a market for a service like AWS. You've simply never worked on a project/system that works better on AWS than on Linode. I know I couldn't run the systems that I currently operate on Linode without multiplying the workload that is needed to maintain them.
Linode and AWS are competitors but there's space in the market for both; they simply fill different niches. Establishing one as absolutely superior to the other is silly and closed-minded. A lot of people chose AWS; go and ask them why (feel free to reach out to me at nick at nasx dot io - I'll be more than happy to talk to you).