* Egress pricing margins ensure lock-in which makes it hard to builds competitors to “commodity” services (eg you can’t spin up your own price-competitive S3 within AWS). Lack of competition means less innovation and more expensive pricing.
* While compute costs don’t necessarily come down, the CPUs get more powerful. At scale, this should be the same as prices coming down. However, it’s not exact and cloud provides pocket this difference as profit / R&D investment.
* SRE costs are a huge chunk of own infra (managing servers at scale). If you’re small, this is a negligible cost. If you’re a large business this is a huge cost. Cloud providers target large businesses so the savings when you’re smaller are less obvious.
* Elasticity is a huge part of cloud capabilities. Most people use dynamic paygo pricing which is more expensive than baseload demand which cloud provides typically discount because baseload revenues can be used for purchasing additional capacity.
So you can't factor in things like inflation and hardware performance, which equally made self-hosted solutions cheaper.
- a Intel 3770K was released in 2012 for $330 retail, or 20 CPUMark/2012$. - a AMD 7800X3D was released in 2022 for $450 retail ($330 in 2012 dollars), or 105 CPUMark/2012$ or 77 CPUMark/2023$
Looks like consumer performance/price has improved by 5.3x.
I'm not sure what exactly the math works out here for cloud hardware, since I don't really have any performance numbers. I'd still expect it to be quite a bit less improvement, since it "feels" like server CPUs have gotten better at cramming more cores on a die, rather than increase each core's performance. Looking at Xeon Platinum 8480+ (2023, MSRP $10k), there's 56 cores@3154 ST CPU Mark, vs. Xeon E7-8890 v2 (2014, MSRP $6.8k) has 15 cores@2175 ST CPU Mark.
Assuming your cloud prices are correct, and with these rough performance figures, you're getting a 4.5x cloud performance/price improvement, significantly worse than with real hardware.
There are three companies doing monopolistic things, they have got away with it because of that plurality.
It wasn't in the past.
It wouldn't be if they had to compete with providers that also wanted to compete.