Main reasons to consider Amazon Web Service or a similar cloud computing environment compared to a hosting provider:
- with a hosting provider, if you get a cheap shared server (say $5/month) you will be very limited in your features and capabilities. You get limited hardware resources that are not scalable. You get a small amount of RAM and a small share of CPU cycles. The ‘unlimited bandwith’ and ‘unlimited disk space’ is quite a myth. Take a close look on the hosting agreement and you will find there all the paragraphs that make these ‘unlimited’ statements useless.
If your hosting provider will find out that you use too much of their resources your account will be frozen.

- if you decide to buy a VPS at a hosting provider you will spend tens and probably hundreds dollars a month for a non-scalable solution. If you need to extend RAM, disk, or add another VPS you have to contact your hosting provider, pay for that and then wait in the queue to be served. Hosting with Amazon AWS is not free either, but it is much much cheaper.

- some local hosting providers, have permanent issues with the servers reliability, bandwidth QoS and general quality of their technical services. Did you ever try to call your hosting provider customer support and get any work done by them? If you did not – try that, it’s a nice experience.

Anyway, if the majority of your customers is overseas and your hosting is not there it is yet another reason to look around.

Summarizing the said, the main factors you should consider comparing Amazon Web Service solutions and a hosting provider are:
– price
– scalability & flexibility, time & money required to make a change, upgrade or downgrade the system
– full ownership / control / access to your server & data
– security
– bandwidth
– data centers that are physically close to your customers
– content delivery network for fast cached content delivery

Fortunately, Amazon Web Services meet all these requirements. With the new AWS EC2 “micro” virtual machine offering starting from $14/month Amazon EC2 prices probably can successfully compete with any hosting provider. A virtual machine which runs on Amazon AWS computing cloud is called “AMI” – Amazon Machine Instance. “Micro” AWS EC2 AMI can be easily converted to “small” and “medium” Amazon AWS instances.

So you can get your very own VPS for just $14/month and you can do anything you want there, scaling up your EC2 AMI when the traffic grows. “Micro” EC2 instance is good enough for most PHP+MySQL apps, J2EE or .NET web deployments, at least if you do not run memory-intensive operations like high-definition video conversions.