Very good point! Let's say you move into a new market, trying to undercut the status quo. The status quo, with their power of scale and experience can just undercut you back. Who is benefitting from this? The customers! So if the customers want more competition they have to pay you to play. Which means they have to co-invest with you and promise to buy your service later.
A good is example are the Apple iPhone screens. If Apple wants a new competing supplier, they have to invest in new competitors.
Not really. Suppose giant A undercuts startup B where A is making a temporary loss but B runs out of money trying to complete, only A remains in the market and A starts charging a premium since it doesn’t have completion.
This is bad for customers in the long term. Like how Amazon is slowly destroying brick and mortar stores, or having Amazon Basics at the front undercutting other sellers. Monopolies mean you don’t have an open fair market anymore.
It's true that benefits for customers would likely be only temporary. But that is not my main point.
I'm explaining a common business move called pay to play, in industries that require very high investments for new competitors. If customers want B to compete, they have to pay B first to ensure B does not make a loss, so everyone wins a little in the end.
So in the case of OP. He needs to finds paying customers first, who are willing to pre-order his service.
I think the point is that the cost should not be the main motivator. I would agree that there needs to be other differentiators in addition to cost, which could provide sufficient moat against other competitors, big or small.
It's possible that there could be non-obvious innovations in how to save money with a low reliability threshold, which Amazon might not be able to effortlessly copy.
It's... interesting... that Amazon offers reasonably priced bandwidth on Lightsail, but it's against the TOS to use it in connection with other services.
Putting it into normal S3 only costs $2.50 a TB. That's very affordable.
To get out of Amazon entirely, they definitely want to gouge you, but it's not the end of the world. If $24 a year is an acceptable storage price, then Snowball export costing somewhere around $36/TB in bulk isn't too awful. (And if you don't have enough data to fill up a snowball, you can probably smuggle it out through lightsail.)
You are confusing "cheapest option possible" with "cheapest option available". Maybe Amazon _could_ be cheapest and most efficient in everything but they aren't, that's why they make a lot of profit with their cloud services. Thus there can easily be a competitor with a cheaper offering, especially if they are cutting some corners as per the article, even if they have some inefficiencies in other areas.
Quantity is a type of quality. Lots of people mainly use cloud storage as a cold storage locker for backing up photos and documents. I'm sure there's ways to innovate in the space that would make certain clouds more appealing, but most solutions are already effective as simple storage lockers. Doing it better instead of cheaper at this point is more likely to be either a megacorp affiliation perk, like a discount on a YouTube Music subscription, or phone company style family plan discounts "Get discounted storage for the whole family if you pay slightly less than the price of four memberships!"
Yes. There's a reason companies like Digital Ocean, Heroku, OVH, ZEIT, Joyent, Rackspace, Linode, Cloudflare and many more have been able to survive and grow rapidly in an AWS-dominated space. None of them are competing by undercutting Amazon in price.
OVH is certainly undercutting Amazon in price. The free bandwidth included in each instance is already a dealbreaker if you actually use the instance for anything other than very heavy cpu-bound loads with small output to send back.
