Yeah, well, it's not as if they couldn't see the total and utter consolidation of cloud and hosting infra coming a mile away. The question was never "if", just "when". Should not be a shock to the local players.
Hopefully they can compete on price. It's like having Google develop a product that competes with you, in that it adds legitimacy to your market. And AWS is known as a feature leader, not a value leader.
There are plenty of organizations that prefer not to host with the PaaS providers, and instead go with traditional hosting providers. Sometimes it co-lo, sometimes it’s for better price/performance for dedicated hosts, and sometimes it’s competitive. Like the others said, this will probably hurt in the short, but help in the long run for these businesses by lending legitimacy and growing the overall space through a significant capital investment.