> The marginal cost of VPC is basically 0. Otherwise they couldn't sell tiny ec2 instances.
That's not strictly true. They could recoup costs on the more expensive EC2 instances.
I have not idea what the actual split is, but the existence of cheap instances doesn't mean much when Amazon has shown itself willing to be a loss-leader.
So what you're saying is kind of the opposite of a marginal cost.
If they are recouping their costs, it's a capital expense, and works differently than a marginal cost. AWS's networking was extremely expensive to _build_ but it's not marginally more expensive to _operate_ for each new customer. Servers are relatively cheap to purchase, but as you add customers the cost increases with them.
If they're selling cheap instances are a marginal loss, that would be very surprising and go against everything I know about the costs of building out datacenters and networks.
That's not strictly true. They could recoup costs on the more expensive EC2 instances.
I have not idea what the actual split is, but the existence of cheap instances doesn't mean much when Amazon has shown itself willing to be a loss-leader.