There are several reasons why AWS does (and should) cost more than a generic solution.
1. If you just look at the cost of bandwidth and hardware, there's no doubt you can find cheaper solutions in the commoditized basic hosting market. AWS solutions, however, remove a lot of manual work that goes into setup, configuration and maintenance of servers. If you're a startup, it costs you (a lot of) money to hire those people. It also cost you time wasted not working on the core of your service. Up to a certain size, the fixed costs of additional personnel heavily outweigh higher bandwidth costs. Evernote and Stackoverflow have extremely high traffic and might have crossed the threshold at which it's profitable for them to look for savings in hosting bill. A vast majority of startups is not in that position.
2. Unique services demand a premium. Most of the hosting companies provide commoditized services. AWS is much more unique.
3. Services higher up the stack demand a premium. The most basic hosting service offers you a bit of physical space in their building and only give you power for the server and network connectivity. Amazon provides a wide variety of services on top of that. Developing those services and keeping them working is much more costly than just ensuring power is on and network is up. They have to charge more (they have higher costs) and they can charge more (they provide a richer service).
4. Ultimately, the prices are set by the market. We can't really say anything about whether Amazon is more efficient at using hardware or power than, say, SoftLayer, based on their prices. First, their services cost much more to provide. Second, they are free to set their margins at whatever level they please. They could run the service at a loss or they could charge an outrageous premium. We don't know. People are clearly willing to pay for AWS services so at the very least they've set the prices in a way that, given additional benefits, is competitive with traditional server hosting.
Well, I was ultimately commenting on margins. Since we agree that at scale, DIY is cheaper, that implies to me that AWS margins are healthy.
On point 2&3, there are plenty of cloud offerings, the more you use premium features, the more you are locking yourself into to one provider.
I would say that the greatest additional benefit over traditional hosting is low startup cost and autoscaling. But once you're established, if you're using those premium features, you're stuck, so your business better have high margins too.
1. If you just look at the cost of bandwidth and hardware, there's no doubt you can find cheaper solutions in the commoditized basic hosting market. AWS solutions, however, remove a lot of manual work that goes into setup, configuration and maintenance of servers. If you're a startup, it costs you (a lot of) money to hire those people. It also cost you time wasted not working on the core of your service. Up to a certain size, the fixed costs of additional personnel heavily outweigh higher bandwidth costs. Evernote and Stackoverflow have extremely high traffic and might have crossed the threshold at which it's profitable for them to look for savings in hosting bill. A vast majority of startups is not in that position.
2. Unique services demand a premium. Most of the hosting companies provide commoditized services. AWS is much more unique.
3. Services higher up the stack demand a premium. The most basic hosting service offers you a bit of physical space in their building and only give you power for the server and network connectivity. Amazon provides a wide variety of services on top of that. Developing those services and keeping them working is much more costly than just ensuring power is on and network is up. They have to charge more (they have higher costs) and they can charge more (they provide a richer service).
4. Ultimately, the prices are set by the market. We can't really say anything about whether Amazon is more efficient at using hardware or power than, say, SoftLayer, based on their prices. First, their services cost much more to provide. Second, they are free to set their margins at whatever level they please. They could run the service at a loss or they could charge an outrageous premium. We don't know. People are clearly willing to pay for AWS services so at the very least they've set the prices in a way that, given additional benefits, is competitive with traditional server hosting.