Since your brought up the prestige issue. Prestige is a very important component when applying to jobs, meeting people, or going to graduate school. So no, Podunk U will not churn out great students.
On the other hand, consider categorical imperative. We need someone to study science and advance the field. We even need medieval historians (albeit, perhaps not so many of them). If everyone decides to become a bullshitting rainmaker of zero net value to society because that's where the money is, then we all lose.
AWS and competitors are very capital intensive businesses. While the software might be easy-ish to replicate with a medium sized software team, the capital required to set up and then run dozens to hundreds of packed data centers is prohibitive for most competitors. The cloud market will turn into the chip market, where the capital cost of fabrication facilities is an enormous barrier of entry to the market. That is why the only real potential competitors in the space are from companies with lots of cash to burn and who can leverage the same "we need data centers anyways" model that Amazon does.
But it doesn't have to be dozens to hundreds of packed data centers. It just needs to be a lot of smaller operations, and a few mid tier like Linode, providing the same service at various prices and scales that make sense to various sites.
AWS as a service is providing a great deal many more services at a much faster rate than much of their competition, they basically own public cloud. They were also first to jump the gun with stuff like ECS and are doing some interesting things around RDS with Aurora. I feel AWS will only become even more dominant.
This is not to say there are some advantages in a few others (say, Rackspace appears to be simple to grasp, excellent human support) and GCE (load balancers don't need to be pre-warmed, etc).
But if anything, I see it increasingly harder for the other providers to keep parity with Amazon, because of their velocity and market share.
Now, for many people using cloud as just a easy way to get IP addresses, it's all the same, but once you start using a lot more of their services, they provide a lot of good stuff in what is basically "middleware" for applications to latch onto.
The question is whether an organization is doing this themselves (i.e. run their own Foo on their nodes) or is using the value added services or not.
EC2 and S3 are't trivial to replicate. Moreover, consider the entire platform and the dominant position of Amazon. Amazon is the Microsoft of yore- they actively cannibalize any profitable service on their platform. How many products is AWS, now? Perhaps 50, or 100? Can anyone reasonably migrate off AWS after integrating with even 5 or 6 of them? Did the profits of Office go to zero as it was copied and handed out for free a dozen times over? Amazon will be making bundles of money with AWS for a long time to come.
For all intents and purposes, Microsoft Azure and Google Cloud Platform have already replicated EC2 and S3, and every other feature they think is worth it. The price war in 2014 was pretty brutal (unless you're a customer, of course!) and it's not going to slow down in 2015.
And as people move away from 'raw cloud metal' to whatever the layer du jour is, what's underneath will matter less and less.
Lots of people concentrate on the Fire Phone, which flopped. Check out other recent Amazon efforts - Fire tablet, Fire stick, Amazon Echo. The first two are solid competitors in their respective spaces (ereader/tablet, streaming media), while the Echo is a pretty amazing effort for a hardware category that didn't exist one year ago.
I have an Echo. Showed it to my kids. They said, "It's like Siri but she can understand us!"
Of course, they were upset that she wouldn't respond to the funny sort of queries you could make of Siri. And my son really wishes her ability to do conversions extended to questions like "how many miles are in a light second" (Siri uses Wolfram Alpha to great effect here. Alexa - Amazon Echo - just apologizes and says she's added a bing search to the echo app.)
