EC2 has been growing rapidly and Amazon has been installing newer (and thus cheaper) generations of hardware, so on average their hardware should be fairly new. Even once they reach steady state, the average perf/$ of their hardware should increase as old stuff is replaced. Clearly Amazon's costs per ECU are declining even though they don't replace equipment every 18 months. I think you're right that the lack of competition is why they aren't lowering prices much.
