Last week I introduced the concept of cloud computing. To recap, the concept is that one can simply buy computing and storage resources as needed rather than investing in hardware and Internet connectivity.

While a few companies have been talking about cloud computing, Amazon is doing it and selling it to anyone with a credit card under the Amazon Web Services banner. To get a better understand of the future of web application development, we’ll take a look at what they offer.

Amazon Elastic Compute Cloud (Amazon EC2) is a Web service that provides resizable compute capacity in the cloud. It is designed to make Web-scale computing easier for developers. To summarize, you upload one or more virtual machine images to Amazon. Then you use an API to start and stop instances of your virtual machines — and pay only for the time you use. Amazon offers several virtual computer ‘sizes’ starting at $0.10 per hour. There is no minimum commitment. You simply pay for what you use. If you design your application right, it can scale very quickly by spinning up additional instances as needed to handle the load.

Of course, almost any application requires storage space and that’s where Amazon Simple Storage Service (Amazon S3) comes in. Amazon S3 provides a Web services interface that can be used to store and retrieve any amount of data, at any time, from anywhere on the Web. It’s storage on demand and, in Amazon tradition, it’s also pay-as-you-go with no minimums. The pricing model takes into account charges for storage, inbound traffic, outbound traffic, requests and whether storage is in the USA or Europe. For example, storage in the USA starts at $0.15 per GB, inbound traffic at $0.10 per GB, outbound traffic at $0.17 per GB, and requests are one cent per thousand. Prices to store data in Europe are slightly higher.

Amazon also offers a database service, a message queuing service to facilitate communication between computers in a distributed architecture and recently introduced the beta CloudFront service which looks like a very promising, easy-to-use content delivery service.

So what does this all really mean?

Amazon has removed many of the barriers to developing Internet-scale applications. Developers can start small with no capital investment and only pay for what they need, when they need it. They also have an unprecedented ability to scale applications quickly in response to increasing demand for them.

But this change also has some interesting security implications which I’ll discuss next week.