The serverless Internet company

Maybe I'm reading this article wrong, but it strikes me that Scoble is unaware that lots of sizable startups don't own servers. What's the difference in this case between using ec2 instances and renting servers from a provider like LayeredTech, SoftLayer, ServerBeach, Rackspace, etc.? I understand there's a huge difference if you're bringing up -- and especially down -- ec2 instances in real time as demand changes, but beyond that, it's renting a server for $70 a month. So, for by his definition, Wordpress.com is a server-less company with 300+ servers in three colos.

We were considering using EC2 & S3 for our upcoming launch, but we did some calculations, and found the minimum cost for 24/7 service comes to about $70 per month not including data or bandwidth charges. Once a site has greater usage and needs to scale, it seems hard to beat, but for the early days it doesn't seem to make financial sense.

If you're considering "cloud computing", you should also check out Joyent. (<a href="http://www.joyent.com/" rel="nofollow">http://www.joyent.com/</a>) They're different than Amazon EC2, though... rather than just being able to scale up by adding additional virtual servers, your servers are also "burstable" up to the maximum physical capabilities of the physical machines. Pretty cool stuff. I just got an Accelerator for my in-progress Facebook-powered site, so we'll see how it turns out. (By the way, Facebook applications get free entry-level Accelerators...)

I'm interested in hearing more about this, too. It sounds like the two offerings combined (service plus storage) make for a complete hosted solution. Is this correct? And how are domain services handled? By a third party?

Has anyone here done this for their web app? I am considering some grid-server space from MT, but if EC2 is good, it seems like it's cheap; is this a viable option?

If I am not mistaking HotOrNot is also running on Amazon's S3, and they get some serious page views