Great post by Benjamin Black the current VP, Research at Joyent and former manager of Website Engineering at Amazon.com. In his post he gives an interesting insight to how Amazon Ec2 came to be.
Black outlines a backstory which takes place in early 2004, "i was told jeff was interested in the virtual server as a service idea and asked for a more detailed write up of it. this i did, also incorporating a couple of requests jeff had, like the idea of a "universe" of virtuals, which i translated into network-speak as a distributed firewall to isolate groups of servers."
He also points out that EC2 wasn't a production environment used to host Amazon.com but indeed a R&D project. He goes on to say "in the amazon style of "starting from the customer and working backwards", we produced a "press release" and a FAQ to further detail the how and why of what would become EC2. at this point attention turned from these paper pushing exercises to specifics of getting it built."
Read the full post here