Amazon announces "Elastic Compute Cloud" (EC2) today. EC2 provides virtual compute capacity in the cloud. It works in conjunction with Amazon S3. From the EC2 FAQ:
Q: What operating system environments are supported?Amazon EC2 currently supports Linux-based systems environments. Amazon EC2 currently uses a virtualization technology which only works with Linux environments. We are looking for ways to expand it to other platforms in future releases.
Q: How is this service different than a plain hosting service?
Traditional hosting services generally provide a pre-configured resource for a fixed amount of time and at a predetermined cost. Amazon EC2 differs fundamentally in the flexibility, control and significant cost savings it offers developers, allowing them to treat Amazon EC2 as their own personal data center with the benefit of Amazon.com's robust infrastructure.
This opens up a number of exciting possibilities. I'm already wondering if I can use this to replace my traditional web hosting provider; the scalability could be quite compelling (not sure yet about the economics). I'll have to do some more reading of the docs to find out more.
Update: Techcrunch now has some commentary on this as well (not sure what makes it "exclusive").
Update 2: More from me.