[sokoloff]

Something about your argument is not making sense. You say that as storage needs increase, the costs go up dramatically (that there are significant DISeconomies of scale).

Yet Amazon is acting as an aggregator of all those ever-increasing storage needs, operating at even higher scale, yet is able to turn a profit providing a service at scale. Amazon almost certainly isn't building their own hardware.

It seems you're arguing in circles somewhere there...

[barryrandall]

Sorry, I forgot to mention one of my assumptions...

There are tremendous diseconomies of scale if: you're buying the storage through traditional storage vendors. When your storage needs get really big, you'll realize that stuff is 1) a waste of money, and 2) not meeting your needs (you shape your needs to fit the available products, not vice versa). At that point, it makes enough sense to roll your own storage solution (write your own S3), tailored to your very specific needs.