I have managed and coded a lot of sites on both dedicated, co-located servers I had full control over as well as on Amazon. From my POV it's definitely worth 10-20 times more. Unless you are a HUGE outfit, Joe's servers are very annoying to manage.
It all depends on what you are doing do; you want Amazon (or any cloud service) to scale automatically and auto failover for sites which grow (and shrink) massively over time.
I have no clue (at all) why people would run sites on Amazon which just use 1-2 servers and cannot scale automatically (and do not need to). In that case Softlayer or Iweb or something would be much better. Especially as they, these days, also have some 'hybrid' cloud experience where you can, not exactly at the speed/ease of Amazon, add dedicated or virtualized instances.
Read the article. I'm simply saying that EC2 is at least 10 times more expensive than the competition but people don't seem to realize it. The performance on EC2 is basically equivalent to a 10 year old crappy computer.
I'm the total opposite of a server guy, but I think your tests may be in some way flawed. At work we have a site that got high traffic for a few months on a dedicated box @ softlayer -- and it keeled over, unable to handle the outgoing data.
Moving the site to a EC2 large completely removed the problem.
I realize this is completely anecdotal without much detail (well I know the softlayer box runs about $200 a month, so it can't be their worst thing) but it does make me wonder.
That's very odd. James Golick of Fetlife had the opposite experience with Softlayer (link to his video in my post).
I currently manage ~40 servers on EC2 and I'm confident that I could get away with just 5 "decent" dedicated boxes. EC2 gets expensive quickly, but most and foremost, managing so many instances is quite a headache.
Wait... you're migrating from EC2 to someone selling computing time on really old CPUs? Sure, EC2 isn't fast, but it is somewhat reliable, which is worth something.
A sledgehammer is a 9 year old CPU (from 2003), and even if it was 10x faster than the Amazon instance, the chance that it will survive for 4-5 years more is quite low. Paying for really old hardware is a bad idea, generally.
I'm not migrating from EC2, this is for a personal pet project where price matters.
However, you just proved my point. If a 9 year old CPU performs 10 times better than a m1.small for the same price, something's not right.
That said, it's not true to say that an EC2 instance is more reliable than an old dedicated box. We've had countless "degraded node" notifications over the years for our EC2 instances. For example, if a network adapter fails in the physical machine, even if it does not affect your instance, Amazon will shut it down. So in a way, many more things can go wrong.
At the same time you just pointed to one of the flaws in your argument that EC2 is overpriced: You are comparing two services which are very different. It's even right there in the name: Amazon Elastic Compute Cloud. EC2 allows for elasticity and scalability and therefore is not very strong in the pet-project market. If you want to talk about a rip-off, compare it with Microsoft Azure, Google App Engine or some other services and identify in your post on which grounds you compare them. A dedicated server has very little in common with an EC2 instance.
I bet you could buy a laptop for less than 100 USD, install your LAMP server on it an connect it to any leased line to get superior performance to an EC2 instance. But you lose all the advantages EC2 was created to have.
It's not a "Big Scam" though, it's just bad performances. It still has lots of pros, instant deployment to name only one.