PaaS hasn't lost - it's just a smaller market than IaaS (Infrastructure as a Service), and it will take longer to become mature.
IaaS is immediately useful to anyone who needs a Linux box. PaaS needs longer lead times for people to adapt to a new platform.
Amazon's approach to the PaaS market is probably a lot better than Google's.
Google went: here's a new set of APIs, write custom apps to use them.
Amazon let you host standard LAMP apps, and then slowly started offering parts of the stack as a service (oh, you need a database? Here, use our managed one. You need search? We have that. Load balancing? Just use ours, it's easier than doing it yourself.)
IaaS is immediately useful to anyone who needs a Linux box. PaaS needs longer lead times for people to adapt to a new platform.
Amazon's approach to the PaaS market is probably a lot better than Google's.
Google went: here's a new set of APIs, write custom apps to use them.
Amazon let you host standard LAMP apps, and then slowly started offering parts of the stack as a service (oh, you need a database? Here, use our managed one. You need search? We have that. Load balancing? Just use ours, it's easier than doing it yourself.)