On one level his decision makes sense.
You can look at it this way...
On one level of thought, he has outsourced his infrastructure. This allows him to run a lean IT shop and if there is an outage, all he has to do is point a finger at Amazon. This is essentially the same as if he outsourced his IT shop to IBM, HP, etc ... to run his operations for him.
Sure he's paying for it. But its still could be considered cheaper because it allows his lean team to focus on growing the business and find new/more revenue generating ideas.
At the same time, its a short term view of how to run an IT shop. Getting up to speed and to market faster than the competition, along with have less assets and infrastructure to sell or manage if there's a buyout ... essentially a take the money and run approach...
However, having said that. Based on the size of the operation, it would be less expensive if he were to make the investment and build out their own infrastructure. This is taking a longer viewed approach.
Here you build up your production staff, networking expertise, and build out your own data centers. You then have to deal with the costs of the facilities, electricity, communication costs, redundancy, all sorts of things which would be cheaper for you to do if you weren't too busy doing something else.
Build it or outsource it. Whichever side of the fence you're on, you will choose the option you think is best.
Mine's the jacket with the padding so I can place it between my legs as I straddle the fence.