I dunno, if you can’t provide enough value to adequately mark up bulk purchases of commodity Cloud storage, what exactly are you selling?

Dropbox's business IS storage, which means running on top of storage is always going to be a threat and cut into their margins. What incentive does AWS have to give Dropbox a really sweet S3 deal? They know Dropbox needs the storage. It's like why it's better for a business to own the building its in, because if you become successful, your landlord has the incentive to increase your rent. This isn't about if AWS can provide a compelling bulk rate for S3, it's about if your business lives or dies based on the AWS deal renegotiation.

I guess that depends on whether you think cloud storage is a commodity.

Surely despite their business being storage, Dropbox would be foolish to design and manufacture their own hard disks?

No, I don't think that Dropbox should manufacture its own hard drives. The main reason is that switching hard drive manufacturers can be done piecemeal as you need to buy them. Getting data out of S3 if the contract negotiations go bad can cost more than storing it. It's just very different economics and level of vulnerability given the two.

Cloud storage before all the major cloud players were even a thing, for starters?

Sure, that was a great feature in 2007. (S3 existed when Dropbox was founded, FWIW.)

It eventually stopped being a differentiating source of value, and trying to out-commodity the CSP’s on storage cost at scale seems like a bad strategy to bring value back to the product. At tremendous effort you make it possible to lower prices by 20% or whatever, in order to keep the same profit on an undifferentiated product. Who cares?