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You're severely discounting the very large margin those companies take. It is not hard to build a medium sized infrastructure, with quality, cheaply - if you have access to expertise. This usually means hiring a few infrastructure jockeys from the larger companies.

Your SLA will likely be better than with public cloud.

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You should absolutely build a public cloud competitor if you believe your numbers. By your numbers you'd make a minimum 100% margin and as much as 400%.

Unfortunately two things in the way of that are will and the cost of building a long tail of product features. First, that I'm not interested in running a standalone business, and second - my research here (it's been a lot) depends on being able to spend 20% effort on an 80% solution. I don't build a dynamo or a SNS and don't need a sales and marketing budget when I'm embedded in a large company building something purpose-built. The overhead of normalizing for industry wide generic use cases kills the 500% dream.

There's obviously room here though because AWS definitely takes a margin and that means opportunity!

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