While there are clear benefits for small business, larger enterprises have signed on, too. For example, Microsoft Corp. has used the service to speed up software downloads, and Linden Lab has used it to help handle downloads of its Second Life online virtual world.

Where EC2 is headed

One major question raised by EC2 has nothing to do with technology, and everything to do with business: Has Amazon made a blunder by venturing outside of its core competency? After all, selling the latest best-seller and holiday gifts is one thing; trying to be a major league IT provider is something else entirely.

But Amazon execs don't see things that way. In fact, they maintain, EC2 and similar services are at the heart of the Amazon business plan.

"Amazon is fundamentally a technology company; we've spent more than one and a half billion dollars investing in technology and content," says Adam Selipsky, vice president of product management and developer relations for Amazon Web Services. "We began by retailing books, but it was never in our business plan to stay with that."