I actually think that amazon is sitting on an absolutely huge cash cow right now with ec2. They have a very large and growing customer base, and they are in a situation where they can slowly increase prices over the next few years without anyone noticing or minding.

By "raise prices" I mean, of course, lower them slower than their costs drop. that's just how it's done in this industry; nobody actually increases prices.

I went to a talk the other night by netflix; they were talking about how they moved all their stuff into the ec2 cloud. Now, first, this is costing them a huge premium over owning hardware, even as is. Now, just think, if amazon decreases prices slower than their costs fall (which will fall approximately with moore's law) think how much work it is for netflix to move off of ec2.

"But," you say "Power isn't getting any cheaper!" which is completely true, of course, but the amount of compute power I get for a watt of electricity is dropping approximately in line with Moore's law, so as a provider, you can pretty much bank on your ongoing costs decreasing dramatically every hardware refresh.

Amazon is in an excellent place right now. I don't know that it justifies a 67 P/E ratio, but depending on just how big ec2 is, and how many other large corporations start outsourcing to them, it very well may be worth more than that.