It means Amazon AWS is going to keep moving from bare VMs and storage all the way up through every component required to build on the web. And I should have been more clear. When I said relentless, I mean one should consider the possibility that they will move way beyond traditional definitions of hosting.

Is it hard to imagine Amazon providing utility-priced anycast DNS?

How about high volume email delivery?

Why not a Ruby, PHP, or python hosting stack?

Whole platforms, similar to Google Wave?

Where's this leave startups? Mostly unchanged if they're looking at their markets with a very critical, paranoid eye.

Dropbox makes desktop software and a web interface to cloud storage and shouldn't be affected negatively by new cloud services.

It means that companies offering services for AWS users need to be aware that AWS is growing vertically and could easily knock them out.

AWS is something I've been meaning to look at for a while now but from what I've seen, the value add services provide a easier experience. I'm not sure how else services are going to be able to differentiate. And at that, you're only going to attract small customers as larger customers are more likely to deal with any technical issues to the lower cost. Although, at that point, they may be willing to ditch AWS altogether. How AWS continues to evolve will be really interesting.

Client services should be safe for a while - that's the place to add value.