Let's think this through. 1. If IT infrastructure was a relatively small cost for their retail business, why on earth would Amazon have built a core competenc

Let's think this through. 1. If IT infrastructure was a relatively small cost for their retail business, why on earth would Amazon have built a core competency building infrastructure and services that operate at a scale only a handful of other companies match? A lot of AWS is evolved from internal services that supported their retail business. 2. Given the above, what possible reason do you have for thinking Amazon doesn't strive for efficiency in its datacenters? They spent ~$80M on servers in 2008, and it seems very likely that they spent at least that much this year, so most of their equipment is fairly new. Also, given that power & cooling costs are a significant portion of both capital and operating costs in a data center, the economics for aggressively retiring older equipment is quite strong. 3. Bloated legacy choices: See the above two points. I think the fact that the dominant infrastructure as a service vendor grew out of a f'ing bookstore should tell you that Amazon is not a company that gives bloat and inefficiency a free pass. Furthermore, given the growth they've seen in the last few years, they've had both the opportunity and probably, the necessity, to revisit earlier choices. And by the way, they hired a VP earlier this year who clearly lives & breathes data-center efficiency. 4. Don't underestimate the advantages of scale in this business. Say saving 10% in costs is worth $50K to your startup. Consider how many dollars shaving just 1% in costs is going to be worth to Amazon. It could easily be enough to hire an engineer for a year. For a startup, it might be enough to buy lunch for the company, once a month. It going to play out in other ways too. Amazon is surely transferring enough data that they can negotiate free peering, something a little startup is going to have a harder time doing. And having a broader customer base likely gives them an advantage in higher average utilization while still keeping a reasonable safety margin. 5. You act as if the Amazon name offers nothing to small business and startups. The relative certainty that Amazon is going to be around tomorrow, next week, next month, and next year is not some foolish superstition. How big is their Amazon bill going to be that it is worth risking data-loss or multiple days of downtime because they were dependent on a startup that ran out of funding? In the end though,its really not clear to me how you think a startup is going to "absolutely wipe the floor" with Amazon. What's actually going to be better? Clearly, there is room for improvement, but you're talking about taking on the market leader in a growing, and all you talk about is efficiency.