In summary, AWS rides the benefits of economies of scale. (<a href="http://en.wikipedia.org/wiki/Economies_of_scale" rel="nofollow">http://en.wikipedia.org/wiki/Economies_of_scale</a>)<p>They design/build their networking gear, full hw/sw stack. This is cheaper and more reliable (their code is simple/customized to their datacenter use case.)<p>They also have SingleRoot I/O virtualization at each server: each guest VM gets its own hardware virtualized link, which is great for reducing the giant tail at scale problem (google for Jeff Dean's description of the problem.)<p>Their relational DB system RDS is getting popular: 40% of customers using them. So they compete with Oracle by offering similar highly-available service with much less price. They keep adding new relational DBs: Aurora, RedShift, EBS.<p>They design/build their power infrastructure. Faster.<p>They are very customer oriented, they make things simple/painless for customer use cases. They are obsessed with metrics, measuring everything, with tight feedback loops to improve things weekly. They rolled 449 new services + major features in 2014 alone.