> claim their retail arm is not and will never be profitable
If this is true, then isn't the retail side effectively removing all the oxygen from the ecosystem? This sounds massively stagnating, the combination of not-profitable and extremely efficient.
Even before Amazon a fair number of big box chains removed a lot of oxygen from the retail ecosystem. No small number of those chains themselves went out of business--yes, in part because of Amazon. (Also Walmart.)
I don't really buy the "will never be profitable" part although perhaps less so than AWS.
I find it curious that the other two top-brand public clouds do not undercut AWS significantly in areas like network bandwidth charges, when other operators can offer similar service it vastly reduced cost. This does look like a market failure, and I don't know why we are in this situation. Maybe the top brands are just very, very strong?
Big customers don't pay list prices, they get negotiated rates. To the extent Azure and GCE are interested in competing on price, it's the big customers they're after. All cutting list prices would get them is a bunch of price sensitive small fish, and that's not where the money is.
Remember that Google doesn't pay for bandwidth in either direction due to it owning such a large percentage of the backbone. But yet it still charges the same egress fees as the other cloud providers.
No large customer pays retail for anything anywhere.
I think we're finding that tech oligopolies don't lend themselves to healthy markets. The barrier to entry to becoming a full service public cloud is massive. The established players know that there is little chance of an upstart coming out of nowhere to eat their lunch, so they compete (or don't) appropriately. Getting cutthroat on pricing would only hurt everyone's bottom line.
Smart phone apps are the same story. Android and IOS developers have to deal with draconian rules and exorbitant fees. In a healthier market other companies would swoop in and improve on those huge fees and arbitrary moderation, but creating a new smartphone platform is ridiculously difficult, which means that the two established players can basically do what they want within the law.
If this is true, then isn't the retail side effectively removing all the oxygen from the ecosystem? This sounds massively stagnating, the combination of not-profitable and extremely efficient.