Nirvanax, an online storage utility now in public beta, has been touting its 99.9% uptime guarantee as a way to set itself apart from Amazon’s S3 storage service, which has lacked a so-called service-level agreement. Today, Amazon responds by rolling out its own 99.9% guarantee. This is a great – and early – example of one of the key advantages that computing utilities have over in-house computing operations: the utilities will compete directly with one another on critical performance standards, like reliability and security, as well as pricing. That competition promises to rapidly drive up standards and push down prices, to the benefit of the utilities’ customers. In-house computing operations also strive to improve performance and reduce costs, of course, but they’re shielded from the fierce, head-on competition that drives innovation, experimentation, and leaps in performance.

Amazon isn’t going to be able to rest long. A new utility startup, Flexiscale, is already promoting a 99.95% uptime guarantee.

Next stop: 99.99%.