Machines provisioned by API were not mainstream in 2006, the "cheap" way to host was shared hosting, and dedicated / cpanel boxes were more common than VMs. Actually, pretty sure "vservers" were a big thing at the time and kind of fit where cheap VMs do now.
AWS was a very different product and not really comparable to other things available at the time.
Also the elasticity and backing by a company that had seen the scale themselves, and can possible deliver for you. I remember being a then startup and boxes costing more than 2x the money we were somehow attracted to it and kept it as the option we would move if we ever had a revenue.. Large companies probably spent more than their AWS bills on software license fees (Oracle/ERP/SAP etc) and employee salaries so they don't care.
Linode started in 2003. Just because there was no DigitalOcean shoveling money into the free credits pit of venture capitalism doesn't mean that affordable VPS services didn't exist. According to https://www.programmableweb.com/api/linode, Linode started offering an API before 2008.
AWS was a very different product and not really comparable to other things available at the time.