The 2011 AWS Startup Challenge is now open. Every year Amazon stages a contest to promote up and coming startups that leverage the Amazon cloud. This is the 5th annual contest, and for the first time they’ve opened it to entrepreneurs world wide.
According to the contest FAQ, contestants are to be judged according to the following criteria:
(a) implementation and integration of AWS paid services as described in the Official Rules;
(b) originality and creativity;
(c) likelihood of long-term success and scalability;
(d) effectiveness in addressing a need in the marketplace.
The prizes are split evenly between cash and credits on AWS, acknowleding the new economics around bootstraping a modern tech company. Best of all—and unlike the more traditional sources of startup funding such as angels and VCs—the cash is non-dilutive. The free publicity of winning also doesn’t hurt.
New companies have always been the most aggressive adopters of cloud technology, and startups are obviously very important to Amazon. I’m a big fan of the free-tier pricing model they offer as a way to seed projects, but it doesn’t take too much success before you kick into higher-level tiers. It would be great to see Amazon create some kind of formal startup seeding program. It would be similar to what Sun once offered startups with its free servers back in the days when startups actually wanted physical boxes.
K. Scott Morrison's Blog 
You’ve got great insights about Web Services, keep up the good work!