A couple of weeks back, Amazon.com announced an expansion of its Elastic Compute Cloud (EC2) service. The still-in-beta EC2 is a twist on the much-discussed, if rarely seen in the wild, compute utility whereby customers rent computing by virtual machine (VM)-hour; Amazon's EC2 infrastructure is based on a Xen hypervisor structure rather than running directly on physical hardware.
One implication of Amazon using VMs is that they can easily offer a variety of different VM sizes up to the size of the physical hardware. That was the most recent change announced. In addition to the default "Small Instance," users can now get "Large Instances" or "Extra Large Instances." These might be useful if, for example, you need to pair a heavyweight database instance with some lightweight Web services.
Another implication is that VM images, called Amazon Machine Images (AMI) in this case, can be archived and transported. This is analogous to VMware's virtual appliances. Amazon itself hasn't done much to jump-start an image marketplace at this point as VMware has. However, it does provide a mechanism for customers to post and publicly share AMIs and sees the opportunity for people to offer paid AMIs over time.
I bring this up because Emre Sokullo over at Read/Write Web has a post and table that does a great job of crystallizing why getting into Web services is such a big deal for Amazon. In short, Amazon's revenue is comparable to Google's. The difference is that, while Google is operating at a 29 percent profit margin, Amazon is under 2 percent. Which is probably about the best one can hope for with a big "mail order" retail operation. … Read more