It's a different set of use-cases for hosting versus AppEngine.

If you have an application that should run fine by itself on a single server, 
whether in an application server like Tomcat (it's NOT an app engine, it's an 
application server), or in Apache or PHP, then AppEngine is not for you.
If your application is already written, then AppEngine is not for you (unless 
you want to rewrite from scratch).
If you don't ever need to handle more than a few thousand requests per hour, 
then you don't need to scale.
If your application runs fine on a single server, and can handle 100 million 
registered users (as long as only, say, 1000 are using the application at one 
time), then you should be able to scale on something like Amazon EC2 with their 
dynamic scaling (although that has some monetary costs when you're not using 
it).

AppEngine is about scaling your application when running it on a lot of little 
machines won't work.
If your application needs to process large amounts of data (e.g. finding 
connections across those 100 million users), then a pile of individual servers 
can't do the job, no matter how many you have, so you need something like 
AppEngine that allows you to scale the individual request processing beyond 
what a single server can do.
If your application needs to store huge numbers of records on things (like 100 
million users with 1000+ social links per user), then MySQL, Oracle, and other 
RDBMS's will fall over, so you're going to need a true distributed datastore 
(Amazon's SimpleDB and AppEngine's Bigtable are examples) that can handle 
vastly more data than one (reasonable) machine can manage.
If you need to handle a small or moderate number of users most of the time, but 
once-in-a-blue-moon events spike to millions or more per hour, then AppEngine 
is a great solution, since it scales as far as your budget will let it, and 
does so instantly (EC2 takes a minute or more to spool up more instances unless 
you pay for idle instances).

AppEngine won't host your website, however, only an application.
A lot of business that use AppEngine use Google Sites (as part of Google Apps 
for Your Domain) to host the main static site and integrate the AppEngine 
application from there, since it makes for convenient billing and a 
more-or-less transparent user experience.
A lot of others just host the static site on something like GoDaddy, however, 
and either proxy the application (application appears on the main site, which 
just makes a backend request to the AppEngine application to do the heavy 
lifting) or just embed it in the site (via link or IFrame).

I hope that helps,
Joseph Sinclair

Doc Media wrote:
> Anyone had experience (good or bad) with Google's App Engine?  A friend
> of mine was looking to start a project, and we were discussing the finer
> points of a regular hosting company versus something like App Engine.
> Any insights would be helpful.
> 
> - Scott
> 
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