Nice story, but the numbers don't add up at all. If you order managed colo at a provider like Rackspace (which is a much higher level of support and guarantees

Nice story, but the numbers don't add up at all. If you order managed colo at a provider like Rackspace (which is a much higher level of support and guarantees than AWS, basically 24x7 and 100% on network and cooling etc) and get dual or quad CPU machines (really standard, I think they don't even have single CPU as an option anymore) with 256 or 512 GB ram you can run 64 or even much more "AWS medium" nodes on 1 piece of hardware. Because the AWS "core" is based on a very old type of Xeon. So in reality you could run this setup with fully managed network and a 100% SLA on 9 or 10 dedicated machines at Rackspace (or even a cheaper competitor of theirs). The price for that would be around 9x 800 and the cost of two dedicated firewalls for a redundant high performance setup. So I would guess 7 to 8k USD per month or 288.000 USD in three years. Which is over 60% cheaper than the proposed AWS setup. So maybe if you buy way too much hardware and combine it with a lot of manual work that could be done cheaper by a good provider, then yes... AWS looks cheaper. But if you look at a realistic setup on that scale, hardware is much more cost effective. The sweat spot for AWS is a small setup or very flexible load. If you're big with a steady load, a smart setup with a managed provider is much more effective. (And as a last remark: both AWS and Google have huge discounts for long commitments, Google even does it without upfront commitment. So if you use those prices the two options end up much closer again)