The funny business in Amazon's pricing is their Egress Bandwidth, everything is rational.

You're looking at the pricing from a 'cost plus' perspective which is not generally how things are priced.

AWS core use case is IT departments being able to offload all of their infra.

It's a massive, massive advantage. It's so, so much easier and more flexible to use AWS that there is no comparison. It's a 'no brainer' from a cost perspective, which is why, cost usually isn't a barrier with AWS.

Cost only becomes a primary issue when the margin of AWS services is reflected in the cost of the product itself, i.e. when you are hosting a lot of content.

So if you are Phizer, and your IT department uses AWS, the cost is irrelevant.

If you are Dropbox, selling storage for $X/Gigabyte, and your competitors are reducing their prices and you're giving all of your margin to AWS, then you have to do something, i.e. 'make your own infra'.