The list price of cloud is 10x higher than the price of hardware itself so that leaves room for some discounting.

If you're planning to run in clouds, committing to not buy hardware (during the contract term, presumably) isn't a big imposition. Maybe you switch to a different cloud, and you wouldn't buy hardware for that.

If you want to switch back to on prem, there's probably a way to structure acquiring hardware so it doesn't break the contract. Maybe you lease it, maybe the purchase happens through a related company, maybe there was no way for the contracted cloud to find out...

I don't know if this was IT shrugging me off or if it was something real but some IT person at this big ISP I worked at told me that they cannot just buy an SSD — my windows box at work was running off of a hard disk in 2019 — and that there was some contract that said any computer hardware we bought had to be through HP or something like that and it takes many months it something like that.

The usual very short term corporate thinking that maximizes quarter profits while bankrupting the company in the long term. IMO a very shortsighted decision, if not downright stupid.