As a few people have already pointed out, right now App Engine is missing functionality that a lot of apps need. Right now coding to App Engine means lock-in to a single hosting provider.
But that's today, and I think the business will grow up fast. Hosting apps and databases rather than VMs and block devices (Amazon's current model) allow more granular control of resource allocation. At the same time the app hosting model lets you export problems such as geographic replication and failover to the hosting provider. The app hosting business can be accelerated by building on top of VM hosting infrastructure from companies like Amazon.
The way I see this playing out: VM hosting will continue to proliferate. App hosting will start to get popular and the frameworks will get fleshed out with the functionality 80% app developers need. App hosting companies will build their infrastructure on top of VM hosting infrastructure. Interoperability standards will get created (probably in the form of extensions to frameworks like Rails and Django). As there are more companies offering app hosting and the hosting environments get more feature-complete companies will start to switch for new development. In another 3-5 years we will see most new services being built on app hosting rather than dedicated/shared/VM hosting.
For legacy apps and apps that don't fit in the limitations of something like App Engine the VM hosting model works well. I've written one app on App Engine and I'm in the process of moving my company's legacy code base to EC2 hosting right now. VM hosting is always going to give you more control than app hosting just like running your own hardware will always give you more control than VM hosting. That said app hosting will give developers more pre-built infrastructure. How many devs actually want to patch servers or set up MySQL site-site replication? Negotiate bandwidth contracts? Rack servers? Not only is that stuff irritating to deal with, it costs money. App hosting is a pretty big win.
So is App Engine the wrong product? I don't think so, it's just not done yet.
But that's today, and I think the business will grow up fast. Hosting apps and databases rather than VMs and block devices (Amazon's current model) allow more granular control of resource allocation. At the same time the app hosting model lets you export problems such as geographic replication and failover to the hosting provider. The app hosting business can be accelerated by building on top of VM hosting infrastructure from companies like Amazon.
The way I see this playing out: VM hosting will continue to proliferate. App hosting will start to get popular and the frameworks will get fleshed out with the functionality 80% app developers need. App hosting companies will build their infrastructure on top of VM hosting infrastructure. Interoperability standards will get created (probably in the form of extensions to frameworks like Rails and Django). As there are more companies offering app hosting and the hosting environments get more feature-complete companies will start to switch for new development. In another 3-5 years we will see most new services being built on app hosting rather than dedicated/shared/VM hosting.
For legacy apps and apps that don't fit in the limitations of something like App Engine the VM hosting model works well. I've written one app on App Engine and I'm in the process of moving my company's legacy code base to EC2 hosting right now. VM hosting is always going to give you more control than app hosting just like running your own hardware will always give you more control than VM hosting. That said app hosting will give developers more pre-built infrastructure. How many devs actually want to patch servers or set up MySQL site-site replication? Negotiate bandwidth contracts? Rack servers? Not only is that stuff irritating to deal with, it costs money. App hosting is a pretty big win.
So is App Engine the wrong product? I don't think so, it's just not done yet.