I can't help but thinking that Amazon's new Elastic Compute Cloud (EC2) web service, and their S3 storage service are being launched to compete with Google. Or at least help decrease Google's dominance (and make some bucks in the process).

Lots of experts believe that Google's greatest asset is their scalable computing platform. Amazon appears to also have built quite a platform, and they are now leasing at entry level friendly pricing.

With Amazon EC2, you don't need to acquire hardware in advance of your needs. Instead, you simply turn up the dial, spawning more virtual CPUs, as your processing needs grow. During the beta you can run up to 20 virtual servers per account, or more by special arrangement.

The EC2 service and S3 storage service (which is basically the same idea you just pay for as much storage as you are actually use) can also work together nicely. You basically have huge amounts of processing power, and storage at your disposal. And you only pay for what you use.

This will enable some new applications that weren't possible without large amounts of Venture Capital.

Some more reading on this: TechCrunch, Greg Linden, jkeyes, AWS Blog, LeanCode, Programmable Web