
Their economy of scale will be difficult to match.
What about Microsoft - they are constrained by the fact that they have to defend their desktop business - which will prevent them from following optimal cloud strategy!
Cloud Computing Service
Value Proposition of Cloud Computing
Comparison between Amazon EC2 and Google GAE
Though different cloud service providers are following different strategies, these are the two uniquely different approaches. Others either are similar to one of these or fall somewhere in between.
I have excluded SaaS from this discussion - you can see the comparison between IaaS, PaaS and SaaS on this post on Cloud Strategy.
Amazon EC2 (Elastic Computing Cloud)
Google GAE (Google App Engine)
Base Technology
Virtualization
Existing Google infrastructure
Unit of Scalability
Dynamically instantiated virtual machines
Every transactions initiated by user
Every scheduled or queued task
Persistence
Reserved Virtual Machine using standard RDBMS
By directly persisting objects on to Google BigTable
No need for any object-relational mapping
Software License
All software license required
OS, RDBMS, Web Server, App Server ...
Behaves like a Service Bus of infinite capacity
Application code can be directly deployed
Readiness
Reasonably mature
Can be viewed as an extension to existing hosting services
Very much in Beta
Will take couple of years to mature
Best for ...
Application requiring heavy processing power for short duration
Startups wanting to start free and have the ability to scale when the venture succeed
Economics
Saving potential of 30-70% for the right type of application
Not clear
However, it can be an order of magnitude improvement
Innovativeness
Incremental
Potentially Disruptive
Why is GAE potentially disruptive?
Their economy of scale will be difficult to match.
What about Microsoft - they are constrained by the fact that they have to defend their desktop business - which will prevent them from following optimal cloud strategy!