Comment by sofixa
4 years ago
That Twitter thread is only including pure bandwidth. What about all the highly redundant networking equipment ( firewalls, routers, switches, Nitro offloading, DDoS protection, attack detection), software for all those abstractions you get ( VPCs, subnets, security groups, vpc peerings, Elastic IPs etc. ) and engineers? None of what i listed you pay for directly, and bandwidth seems to be the most reasonable product to lump it all in.
It's like going to a restaurant and complaining about the price of steaks because beef should cost a lot less. There's a ton of other things involved, and yes, they probably have a decent margin, but not as much as you initially imply.
AWS has advantage due to economies of scale. (And naturally some disadvantages and challenges due to sheer size, which increases fixed costs, but that means that they can't easily downsize, which doesn't apply since they are still growing at an incredible rate.)
So they should be able to reach the lowest amortized cost for bandwidth with all of those costs included.
They price bandwidth so high because they can and they are still growing.