Yes, the CPU cost is only a fraction, however, the costs of the rest of server (ie. storage and memory) also is dropping precipitously, and has for decades. The cost of networking equipment and any network transit should be factored into the cost of network egress (which starts at healthy $0.09/GB).

The capex on software is negligible, because the cost of duplication is effectively zero. AWS can scale to whatever size they want (as long as their software is architected correctly, of course), and not have to spend more cash.

That said, I'm not faulting AWS for charging what they charge. They have a remarkable service. It's just hard to stomach a post bragging about dropping the price by 5% when they're effectively printing money.

Do remember Intel builds the CPUs, prices them, and basically has no competition.

I have no education/insight at all into this matter, but I would keep that in mind and reconsider your assessment of Moore's law's direct influence on AWS' bottom line.

It's not like storage or network bandwidth are sitting still pricewise. Especially on the SSD front. What was a reasonable price 2 or 3 years ago for some amount of SSD would be considerably overpriced today.