[ChuckMcM]

From the article (its conclusion) :

"Amazon need to lift their game in terms of CPU performance. They offer a great service that obviously extends far beyond a simple CPU benchmark. But when you can get the same work done in Joyent significantly faster for the comparable price, you’ll get far more mileage per instance, which is ultimately going to save the dollars."

Or, "Wow, Amazon sure makes bank on this EC2 stuff, they are selling kilo-core-seconds for a bunch more than Joyent is and they are still the most widely used provider."

There have been a couple of good benchmarks around which instances get you the most 'bang' for the buck, but its pretty clear that Amazon is making a ton of money here.

A good comparison is a rack of 40 SuperMicro 1U dual socket servers with 192G of ram in them. You can create 480 dedicated instances with 16 GB of RAM each, and run the whole thing in a colo facility for $5K/month (power, networking, and floor space). That is 0.2 cents per second, or a bit more than $10/month running them 100% of the time.

Not a bad business to be in.

[ghshephard]

That, $0.2cents/second of course, is on the margin. The real challenge to doing this is, of course, not the hardware/hvac/colo costs, but the several millions (tens of millions?) of dollars associated with building the software infrastructure required to scale/deploy the CPU/Storage/Services dynamically. And then there is the well staffed devops/NOC environment required. And the single-minded dedication to building these services so reliable, that you can run your primary business on. Oh, and course having a massively scaled business to both offset all those devops/noc/engineering efforts, and beta-test your scaling environment/server/storage infrastructure.

Other than Amazon, I can only think of Google being in a position in which such an enterprise can take off.

We tried this at Loudcloud, and it turns out you need more than a bunch of smart people, lots of money, and single-minded focus towards building on-demand infrastructure.

[EwanToo]

Of course today you can get over 90% of the required software off the shelf, see cloudstack and openstack, both used in clusters of 1000s of production servers running 10,000s of VMs.