Amazon have launched WorkSpaces. Back in around 2000, I nearly launched a similar product called OfficeMaster — “your office on the net”.
Here is a web page and some screenshots I dug up:
How did this work?
This was before open source high performance virtualization was available, and so what we had at the back end was a small collection of Linux servers, which you would literally log in to using a VNC browser plugin (or a native VNC client for advanced users).
Inside your user account you had a basic X window manager, KDE, StarOffice, GIMP and a web browser. We had a nice graphical welcome screen written as a Tcl/Tk app (and planned to replace it with a Flash demo).
I even patched the kernel to support 32 bit UIDs, expecting enormous numbers of users (or at least, more than 64K users). And I spent some time hardening the distro (RHL-derived) to remove obvious points of exploitation.
IIRC I reckoned that each logged in user would consume around 32MB of RAM, at a time when perhaps 512MB was the most RAM you could physically fit into a server. We planned to aggressively swap out users who disconnected. Some benefit was had because everyone was running the same binaries of KDE, StarOffice and so on, resulting in a fair amount of sharing.
Why did it fail (to launch)?
At about this time I had broadband at home, but that was pretty unusual. Most people were on 56k modems, and I did a lot of testing around peoples’ houses and it was pretty obvious that running applications over VNC was not going to be very usable. Faster broadband adoption might have saved the idea.
We also felt it was a solution in search of a problem (and I still think the same about this Amazon announcement, and also things like Cloud-based desktop apps). If your company already has PCs running Windows, why would you want to rely on an unreliable remote third party service to do what you could already do on your local machine? You’re not really saving on management costs either because you still have to license and manage your own hardware.
The pricing was also uncertain. You can fit a number of concurrent users on each machine — say 16. Office-type users tend to use their machines at the same time of day, so you can at most oversubscribe by a factor of, say, 2. That machine might have cost you £1000, plus there is a substantial cost of colocation, bandwidth and administration (remember this was before the days of Puppet, so each physical machine had to be tediously installed and managed by hand). I think we looked at charging people £20/month, which would have been a theoretical revenue of ~£7000/machine/year. I’m skipping a lot of detail here: you also needed an NFS server per several machines, a web server, database, spare servers and so on. But that’s both quite a lot of money for providing dubious value to the end user, so we never found out if the market would have supported that, and I don’t think we would have made a profit at that subscription level.