This is bad news for ScaleFT, which provided this service via bastion servers (although not IAM based).
Rackspace managed AWS environments use this for high compliance systems.
The problems it solves are a) that login attempts are logged on a separate system for compliance and b) user management is handled in a centralized way. Both are handled with EC2 Instance Connect.
Another competitor to this is hashicorp vault, which does both certificate based ssh and AWS authentication. (I find the certificate based approach better though)
They could present value if their product works across cloud-providers (not familiar with their business model, but IAM is generally regarded as one of the biggest ways you can get locked into AWS).
Rackspace managed AWS environments use this for high compliance systems.
The problems it solves are a) that login attempts are logged on a separate system for compliance and b) user management is handled in a centralized way. Both are handled with EC2 Instance Connect.