They're not "manag[ing] it themselves" -- it's a gigantic stretch to say that software RAID on an instantly-configured EBS volume is remotely equivalent to specifying, ordering, building, installing and maintaining a number of RAID arrays in a data center.
Basically this seems to put a fairly low upper limit to using 'the cloud' for something a little larger before you get back exactly the same kinds of issues that you were dealing with when using self-hosted hardware, only at a higher price point.
This is ridiculous. The primary issues with self-hosted hardware:
- Energy usage. Data centers only have so much power and cooling to spare, what's available costs money, and you constantly have to monitor/juggle utilization and search for more energy-efficient hardware, which leads to the next issue ...
- Physical plant. You often need to buy it well ahead of time to ensure that you'll have power and space available for expansion should you need it. You need to wire that space, buy switches and routers, and that leads to the next issue ...
- People. You'll need people to order, build, and install those servers. You'll need people to swap out dead components in those servers. You'll need trained people to install PDUs and console management systems, to configure and run your switches and routers.
EC2 and similar pushes these issues upstream. You can manage your servers in software. You don't have any routers or switches to manage, you don't have to order, build, or install hardware. You don't have to expend significant capital outlay on servers or rack space.