[no_wizard]

This is a quirk of the business that is Amazon and AWS, as they started by selling excess compute and expertise, due to how Amazon was built as API first internally it was almost natural.

It’s in no way the norm for a smaller business.

[rented_mule]

This matches the public (i.e., non-Amazon) speculation I was hearing around the launch of S3 and later EC2. But not what I was hearing internally when I worked at Amazon. I was there when S3, the first AWS service, and EC2 were launched. I was working on what I believe to be the first Amazon (non-AWS) application that used S3 for storage. Getting that approved was not easy - all the same skepticism existed internally as externally (cost, availability, durability, security, etc.).

The story I was hearing internally was that it was too costly to scale infrastructure the way Amazon had been doing it, it was fragile, and the expertise wasn't keeping up with growth. So, set the bar a lot higher, and build infra that is big enough and flexible enough to be everybody's infra, and then Amazon's applications (e.g., retail) could run on AWS' excess capacity. Literally the opposite of what external folks were guessing. I believe they were completely physically separate data centers - even the physical location of AWS data centers were on a need-to-know basis internally (the internal lore was "under a mountain in Virginia" - this was years before Regions and Availability Zones). And any bugs in AWS could be worked out with outside usage before moving Amazon's applications onto it.

Also, Amazon needed the elasticity of AWS because of the nature of their retail business. At the time that the initial AWS services were being developed, a massive chunk of Amazon's traffic came during the holiday season. IIRC, something like half of the year's traffic and revenue, possibly more, came in November/December each year. That meant a lot of capacity was sitting idle most of the year. Selling that excess capacity would mean shutting AWS down every holiday season.

For a time, there was an internal mailing list that wasn't yet locked down that contained reports on S3 bandwidth usage. The growth rate was shockingly high. I would guess that within a year or two of release, S3 was using a few (at least) orders of magnitude more bandwidth than everything else at Amazon combined.

[no_wizard]

In broad strokes, the main point I was makings till stands though: AWS was deliberately made to back the demanding scale of Amazon, it was a bet on the future and the Amazon model as much as it was product service, and that did mean they built expertise and hardware up and sold that as a product none the less.

This still isn't the norm for most businesses, even big ones.