Glossary // Amazon Elastic Compute Cloud (EC2)

What is EC2?

Amazon Web Services (AWS) offers a broad set of global cloud-based products including compute, storage, databases, analytics, networking, mobile, developer tools, management tools, IoT, security, and enterprise applications. It boasts on-demand, availability in seconds, with pay-as-you-go pricing. This allows enterprises, start-ups, small and medium-sized businesses, and customers in the public sector to access the building blocks they need to respond quickly to changing business requirements.

Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers. The Amazon EC2 simple web service interface allows users to obtain and configure capacity with minimal friction. It provides them with complete control of their computing resources and lets them run on Amazon’s proven computing environment.

On-Demand Instances

With On-Demand instances, users pay for compute capacity by the hour with no long-term commitments. This makes it easy to increase or decrease the compute capacity depending on the demands of their application and allows them to pay the specified hourly rate for the instances they use.

The use of On-Demand instances frees them from the costs and complexities of planning, purchasing, and maintaining hardware, and transforms what are commonly large, fixed costs into much smaller variable costs. On-Demand instances also remove the need to buy “safety net” capacity to handle periodic traffic spikes. 

Reserved Instances

Reserved Instances provide users with a significant discount (up to 75%) compared to On-Demand instance pricing. Users have the flexibility to change families, operating system types, and tenancies while benefiting from Reserved Instance pricing.

Spot Instances

Spot Instances allow users to bid on spare Amazon EC2 computing capacity. Since Spot instances are often available at a discount compared to On-Demand pricing, users can significantly reduce the cost of running their applications, grow the application’s compute capacity and throughput for the same budget, and enable new types of cloud computing applications. These Spot Instances are ideal for applications with flexible start and end times.

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