Earlier quoted context omitted.
AWS didn't undercut anyone. They offered their customers exactly what they wanted. Many of these software vendors have delayed offering their own cloud-hosted versions, often years after AWS, even when these vendors should be better equipped at running them. Elastic is also infamous for data loss and still has consensus problems so maybe proper priorities are the real problem.
There is no meaningful way for an independent vendor to compete with a Cloud Provider offering the same service. It gets bundled in the initial sales pitch, promoted in their documentation and at events, and gets heavily discounted. It simply becomes the default - and (if on AWS) nobody will even think of Elastic after a couple of years.
AWS just proved that the market wants to buy solutions, not software. There are tons of customers and environments where a dedicated vendor can offer something far better than the lowest-common-denominator that AWS provides.
If you want another success story, just look at how Snowflake built a better Redshift on AWS (quite literally).
1. Start at page 23 of their earnings report: https://s2.q4cdn.com/265747582/files/doc_financials/2021/q2/...