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Even if most of my apps would increase by 10x they would still be cheaper than running a single AWS instance for them. Not even taking into account the easy of management and automatic redundancy that GAE offers.

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As Wesley Chung noted in his reply on the GAE mailing list, GAE is designed for companies who get very unpredictable traffic. If you get a very predictable traffic, it's significantly cheaper hosting on AWS. Some of my apps previously cost $40 a month, now cost almost $300 per month. I can definitely run these apps on Linode for a fraction of the cost.

I picked GAE mainly because it was fast to setup, but I could have equally chosen Heroku over app engine when I first built it. In hindsight, I wish I had.

I seriously doubt that. One AWS instance can run multiple instances of your web app. On GAE you're going to pay about $40/month for each of those instances!

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