This is Richard Landry, reporting live from the NetSquared Conference. I am covering the session entitled “Cloud Dreams” led by Mike Culver, Web Services Evangelist for Amazon Web Services.

Live blogging is a practice of careful listening, and I have a long way to go in that area! So if you see something that I misunderstood or misreported, please post a comment/correction.
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Mike’s presentation was largely an overview/sales pitch for Amazon Web Services (there’s a complete description on the company’s site), but the context was interesting:

In the old days (a few years ago), the business model for an online enterprise looked like this:

a+bc

where a equals the upfront cost to buy and set up servers, and
b equals the monthly operating cost

c equals the add-on capacity as you scale 

The problem with this model is that you can never perfectly match supply to demand. So you either are paying more for excess capacity you are not using, or you unexpectedly max out your capacity when demand spikes...and you crash, losing users and business.

A good example of this problem at work was Radiohead’s famous experiment in releasing an album for download online, with a “pay what you want” model. Demand spiked, and the band’s server crashed.

Those were the bad old days. Now, the new business model is:

bc

where there is no upfront cost, and you just pay for the capacity you need.

This is called "cloud computing" or “utility computing”: just like your electricity and your water bill, you only pay for your actual usage, and you can use as much or as little as you want, whenever you want. Mike called it an “egalitarian” approach to computing: Anyone with a great idea can enter the market and compete with anyone else, big or small.

These are the basic benefits of this new approach to computing infrastructure:

--highly scalable data storage in the cloud
--programmatic access via a web services API
--simple to get going and use
--highly available and durable
--pay as you go
--storage: $0.15/gb/mo

The bottom line is this: For for-profit organizations, this phenomenon is leading to a whole new class of self-funded startups that launch with a great idea and are able to manage the technical costs of scaling quite easily. For non-profits, it’s an opportunity to launch campaigns that drive peak web activity, without having to pay an up-front cost to handle expected demand.

You can learn all about Amazon Web services here:

http://aws.amazon.com

There’s also a blog on Typepad:

http://aws.typepad.com