Cloud computing is "in" - and actually with the latest price change from Amazon it is becoming a bit more real.
I signed up with Amazon, installed the Java tools, created my own image, changed it via Windows Remote Desktop, saved that image and re-started that image - in half a day. Far easier than I thought - just another half day to install database, application, etc. As they have nice Java interfaces for the operations, I think that the entire process can be automated (or you could use the Management Console).
Realistically, the Amazon Elastic Compute Cloud (EC2) is just an alternative to dedicated hosting - but rather than paying for 24h/day, you pay just for the time you have your instance up. You still need to maintain the operating system, application, configure firewalls, implement a back-up strategy - the tasks which are included in a Software-As-A-Service (SAAS) model. Main benefit is that you can select from quite a few starting points, Amazon Machine Images (AMIs) - from several free Linux O/S as well as Windows or commercial vendors (Oracle, RedHat, IBM, JBoss, Compiere, ...) combining convenience and license payment.
We will be using it for our automated build with one instance and one instance per configuration for regression and load testing and are "burning" currently max 2 hours per day for the 3 configurations (4 planned). As these tasks are not essential, delays and non-availability is not an issue. As these are test instances, we just load the image, run it and remove it - no need to save as we are starting the tests always from a clean install.
As you know, persistency is "a bit" of an issue as you need to create a new AMI for any change to your configuration. If the instance crashes, you are back to the last saved image - only S3 storage is persistent. For 24/7 production use, you must solve external database backup and recovery. You might want also to save certain log files externally.
Looking at the cost side: Assuming a "serious" configuration (64 bit O/S, 7.5 GB RAM, 2 virtual cores, 850 GB disk) the hourly costs are $0.40 for free operating systems, $0.50 for Windows (or whatever you agree with RedHat for their cloud starter version) - resulting in $288/month for a free Linux image or $360/month for Windows - basically a slightly more than what you would pay for dedicated hosting with a longer contract. Note that in addition to the $228/360 per month you need to pay also for S3 storage and bandwidth.
With the new "reserved instance" pricing (only available for the free Linux AMIs), you can reduce the costs. So rather paying $228 ($0.40*24h*30days), you'll pay $184 for a 1 year contact or $141 for a 3 year contract per month (plus storage & bandwidth). The reserved instance plan makes sense if you use it for more than 12 hours/day with a one year and 6 hours for a three year plan.
Our way forward is to get experience with using EC2 for build & test, automating deployment and see what the real costs for data transfer and storage/snapshots will be. As we will use it for just a few hours per day, Windows is our choice - not everyone thinks that access via a ssh terminal is state-of-the-art and wants to set up remote X through firewalls.
