Amazon IT and AWS invented a virtual machine infrastructure that Retail used as soon as it was available. AWS services were quickly adopted by many teams as well.
AWS has always beeywn the future of Amazon Datacenter IT. Retail is a huge legacy system, so of course Reddit could launch on AWS faster than Retail could fully migrate.
AWS is an externalization of core Amazon technology. Don't get hung up on the fact that Amazon runs on a babysat patched alpha version released before the 1.0-quality version went public. Retail needs some customizations hat your startup doesn't. Really.
This "skunkworks AWS" meme is a story about the business, not the technology.
http://psav.mediasite.com/mediasite/Viewer/?peid=7ab95f6a5d4...
We're also building Amazon Silk on AWS. As you might guess I think it's pretty cool too.
If Amazon was selling excess capacity, care to guess what would have happened to peoples services come the christmas rush, or any other crunch time for Amazon?
AWS have always been expensive for capacity you need most of the time compared to renting dedicated capacity elsewhere, as you're not only paying for the capacity, but for enough excess capacity for Amazon not to run into the PR disaster of not being able to handle requests for new instances.
The numbers and plain logic just never matched the perception of Amazon selling excess capacity.
The most amazing thing about AWS was how Amazon managed to get people to see it as the most amazing thing to ever happen for hosting and create the perception that you somehow paid for less, when for most typical web hosting scenarios you pay more for a service that is pretty much promised to be less reliable.
(Note that I use EC2 for some things - it has it's uses, and is a good product, but it was way overhyped)
Also, in response to pg's post below, Amazon has increased its usage of AWS substantially in the last few years. The main website primarily runs on AWS, many individual services have been migrating to AWS, and S3 is heavily used internally for static storage. It wouldn't surprise me if Amazon was running 100% on AWS within the next few years. Or, you know, so I hear from rumors... <_<
Amazon always tried to give the impression that they use AWS but (at least in early years) those were half-truths (i.e. statements vague enough that if you squint at it one way you can read "Amazon's internal systems are build in AWS services" and if you squint at it differently, they might just as well say "AWS's servers are hosted in the same data center as Amazon's servers"; public perception was the former and the reality was closer to the latter).
That, of course, doesn't mean that 37 Signals' advice isn't good, just that this is not an example that confirms that advice.