At root it seems you're essentially asking Amazon to replace all their datacenter servers every 18 months to keep up with processor technology. I don't think t

At root it seems you're essentially asking Amazon to replace all their datacenter servers every 18 months to keep up with processor technology. I don't think the economics work out for that. There have been price cuts, and I bet there will be more as Amazon pays off the hardware. Once their investment is amortized and the infrastructure is paid for, at that point the only costs on the balance sheet are the operating costs and prices would bottom out. Worth pointing out too is that Moore's law governs transistors/cm2/$, not CPU speed as such. Thus Amazon could take advantage of Moore's law simply to fit more instances on a given chip. They may not necessarily pass these lower costs onto the customer _as rate decreases_ if the current rates are competitive in the market, and at the moment they appear to be - why would Amazon bite into their own profit margins for no reason? I have a pet theory (which I think leads to wrong conclusions at the moment, but hey) that once CPU becomes a utility, Jevons paradox will apply and prices will start to decrease more slowly as opposed to collapsing like it has to date. FWIW I wrote the thing up here: http://ianso.blogspot.com/2010/05/jevons-paradox-moores-law-and-utility.html http://ianso.blogspot.com/2010/05/jevons-paradox-moores-law-...