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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