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The idea is to deduplicate / eliminate redundancy one layer up. So if you are storing an image in S3 let's say it's replicated 10 times to ensure data safety. If I store the same image it doesn't need to be stored another 10 times.

Getting customers to trust a smaller company's software is definitely a top risk. I wouldn't start this company now, but it might be worth doing in 2015. Watch this space!

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My biggest concern about the article is that it doesn't prove its premise. In fact, the S3 service is only arbitrageable if all the other things you need to do to build your proposed service are free, or less expensive (including opportunity cost) than the profits you generate by doing them. This is far from certain, because even with the infrastructure all built it's not clear to me that you could turn a profit when you factor in your running costs like CPU and RAM used to actually make the system function, much less the support staff.

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