Via Scoble, I learned that SmugMug doesn't actually run any servers - they do it all on EC2 and S3:

He nicely and calmly explained that, yes, every server the company owns is actually running on Amazon’s S3 and EC2 services.

The world has changed. Now ANYONE can build an Internet company and get it up to scale. No more spending nights inside data centers trying to keep servers running.

Looks like Nick Carr is onto something with his continued pushing of the idea that IT infrastructure today is like power infrastructure was a century ago. Back then, it was common to own your own power, just like it's common now to own your own server. It will take awhile to switch completely (see Carr's latest post for why) - but this changes the game quite a bit.

Here's one huge way it changes things: if you sell servers, your market is going to start shrinking (in terms of potential customers) fairly dramatically. Instead of selling tens of servers to thousands of companies, it's going to move to selling thousands of servers to a handful of companies. Say you're Microsoft, and you notice that outfits like Amazon favor Linux, or Solaris (or flip it around - it doesn't matter much) - the very nature of your selling environment is shifting. It's relatively easy to find someone willing to switch to your OS and hardware in a sea of potential buyers. How easy will it be to get Google or Amazon, for instance, to change the basic nature of their server farms?