Timing is everything. Sometimes the current market pricing for a commodity is too expensive to make your business viable today but in the future that will not be the case. Just depends how long that will take.
With replication to 3 data centres.
But even renting space by the 1U and leasing servers directly adds surprisingly little overhead.
400TB even at the Reduced Redundancy Storage pricing is ~$20k/month up until the price drop. With the price drop it looks like it'll be more like $9300 with RRS, which is actually getting cheap enough that it's worth it in some cases, to avoid having anyone spend their time on managing anything. The gap will increase again once you factor in request pricing and bandwidth, though, as even my standard price list prices for bandwidth would add up to less than the cheapest published bandwidth tier at Amazon with just a tiny little bit of hassle (BGP setup to multihome each sites with 2-3 different transit providers with different coverage - lowers cost by letting you pick a transit deal that does not give full access to the internet at very low cost coupled with a full price full coverage one)
Or I could spend about $12k/month at Hetzner for the same storage + an aggregate stated "guaranteed" bandwidth of about 2Gbps per location at no extra cost. Again, without shopping around. The moment you do more than about 20-30TB transfer/month, Hetzner becomes cheaper than S3 with that setup, and probably at about 50TB+/month it'd take effort to beat them when buying my own transit too.
You can definitely beat those rates at large enough scale but for a startup you're talking about dedicating a non-trivial chunk of your skilled technical staff's time in the hope of breaking even. That's an obvious move for Backblaze or Crashplan but for other companies it might be a dubious investment versus nailing the core product.
From that, it looks like their loss over 26 months was ~$300,000. Their total AWS costs was less than $400,000 over the same period.
Downloading 1 GB = 4x the cost of the S3 storage at the reduced prices. If everything is viewed once [doubtful], that is 4x the price of the S3 storage. Given that ti would be impossible to reduce the total cost by even 50%, let alone the 75% they'd need to break approximately even.
I didn't see S3 broken out specifically anywhere which is why I'm just making an educated guess. :/
So basically at their peak, they had ~174TB S3 and ~47TB S3 RRS. That month cost them ~$16.2k, whereas after April 1 they could have put everything in S3 for ~$6.7k. That's a big difference, but they were still getting taken to the cleaners over some other services like RDS.
RRS: 2+3+6+8+9+18+19+22+27+34+42+48+7=~245 TB/months=~
Normal: 7+9+13+19+24+46+56+65+76+95+123+153+174+25=~885 TB/months
0.055 * 885 * 1024=$49,843
0.044 * 245 * 1024=$11,039
$49,843+$11,039=~$60k saved which is 20% of what they were short, if they had started with April 1st's pricing.
If you can reduce the AWS $400k by 40% due to the reduced pricing for EC2, you'd still fall short.
Are there any ready-to-deploy solutions for this?
Whereas software, if you're doing it right, should have much higher margins.
Sidenote: I'd be very curious to know what the "typical SaaS business" has as its gross margin, factoring in all sales against "cost of goods": servers, bandwidth, operations, etc.