An honest question. Why do you guys use AWS instead of dedicated servers? It's terribly expensive in comparison, nowadays equally complex, scalability is not magic and you need proper configuration either way, plus now the outages become more and more common. Frankly, I see no reason.
Let's consider RockCo and CloudCo. They both provide a B2B SAAS that is mostly used interactively during the working day, and mostly used via API calls for the rest of the working week. Demand is very much lower on weekends. Both RockCo and CloudCo were founded with a team of six people: a CEO who does sales, a CTO who can do lots of technology things, three general software developers, and one person who manages cloud services (for CloudCo) or wrangles systems and hosting (for RockCo).
In the first year, CloudCo spends less on computing than RockCo does, because CloudCo can buy spot instances of VMs in a few minutes and then stop paying for them when the job is done. RockCo needs a month to signficantly change capacity, but once they've bought it, it is relatively cheap to maintain.
In the second year, they are both growing. CloudCo buys more average capacity, but is still seeing lots of dynamic changes. RockCo keeps growing capacity.
In the third year, they're still growing. CloudCo is noticing that their bills are really high, but all of their infrastructure is oriented to dynamic allocation. They start finding places where it makes sense to keep more VMs around all the time, which cuts the costs a little. RockCo can't absorb a dynamic swing, but their bills are now significantly lower every month than CloudCo's bills, and the machines that they bought two years ago are still quite competitive. A four year replacement cycle is deemed reasonable, with capacity still growing. And bandwidth for RockCo is much cheaper than the same bandwidth for CloudCo.
Who's going to win?
Well, you can't tell. If they both got unexpectedly sudden growth surges, RockCo might not have been able to keep up. If they both got unexpected lulls, CloudCo might have been able to reduce spending temporarily. RockCo spent more up front but much less over the long term. CloudCo could have avoided hiring their cloud administrator for several months at the beginning. RockCo's systems and network engineer is not cheap. And so on, and so forth.