Cloud providers (especially Amazon) can definitely be a bit greedy / shady about pricing and lock-in, but the key thing is that they have room to lower prices w

Cloud providers (especially Amazon) can definitely be a bit greedy / shady about pricing and lock-in, but the key thing is that they have room to lower prices whereas a bespoke data center does not. Most data center machines run at a tiny fraction of their capabilities; seeing a CPU running at 25% is definitely something that stands out. Because of this, cloud operators can oversubscribe these machines in various ways, packing workloads of multiple tenants onto a single box while a single-tenant bespoke DC can't. They can also do things that schedule DC-wide resources (namely power) in ways that renting space in a colo cannot; they can shed load in insightful ways when a power overtopping event happens that can minimize the impact (e.g. throttle / nuke VMs that can operate in a degraded mode before impacting other critical services). No hetergeneous, multiple-private tenant DC is going to oversubscribe their rack- or row-level power delivery to tenants and require them to hook in to a smart system to manage overtopping events; they just won't trust their tenants to do the right thing, as they have no power over the tenants' machines and power draws; the cloud providers do. At the end of the day, the economies of scale are just hard to beat, in terms of COGS. The real question is whether they'll pass the savings from this on to the customers or the shareholders' dividends, and so far it seems like it is the latter.