They charge you for everything. Data transfer in: charge, data transfer out: charge, DNS lookup: charge, storing a file: charge, etc.

It's one of those situations where it's a death by a thousand cuts. When you're cost provisioning, you can figure out the big stuff, i.e., we need 25 EC2s m4a.2xlarge instances with 40TB of S3 storage, and a 2TB Aurora instance. But once you get the bill, you start seeing the costs of ELBs, NAT gateways, inter-region transfers, etc. Individually, these costs aren't significant, but in aggregate, they can make up a health chunk of your monthly bill.

Plus, their managed solutions are fucking expensive. We moved a self-managed ELK cluster to an AWS-managed one and the costs went up by a factor of two.

Perception that they are THE cloud player to use with great reliability and enterprise focus, so people support their protocols and develop their products for AWS and end up with a bit of lock-in. Mid to large enterprise continue to get on the cloud train hype and spend tens, to hundreds of thousands a month on AWS/S3 instance costs and cannot figure out how or why the bill is so expensive. Then they spend internal costs and personal resource time trying to figure out how they spent so much money on AWS. This happens where I work on both the test/dev and also production hosting.

If DO or Linode were an option to consider, we might be able to save so much money but our own customers use and believe in AWS so we develop and test on AWS. It's a bit of a vicious cycle.

AWS has few services that I imagine yield massive margins with not that much cost to them, which can mainly be justified by the services being pay-per-use and having a small overhead for the customers. And then, I believe most of the AWS's profits come from its enterprise customers which they have plenty of (who aren't in turn that price-sensitive as long as they see profits from their end).

DO on the other hand from my experience has been catered towards small businesses or hobbyists who simply just don't bring that much money vs even a one giant company will bring. And since DO doesn't have all the goodies of AWS, it can't really directly compete with it for those big customers.

It's a very good question. I would imagine more economies of scale? but, I would have thought that DO has enough economies of scale to reap all the benefits. but, I'm not sure.

My impression is that DO is doing just fine. I get the sense that the layoffs are just to add to the profitability, not necessarily a sign of weakness. The article did mention that they were still growing revenues very aggressively.

They charge considerably more

http://calpaterson.com/amazon-premium.html

And they have a lot of lock-in too.

AWS is just plain more expensive. They charge more money for more parts of services provided.