What is Amazon EC2?

Amazon EC2 (Elastic Compute Cloud) is AWS's service for renting virtual servers in the cloud, allowing organizations to run applications without owning physical hardware. You pay only for the computing time you actually use, scaling resources up or down as your workload demands.

This guide covers how EC2 works, the different instance types available, common use cases, and pricing models to help you determine whether EC2 fits your organization's computing requirements.

What is Amazon EC2

Amazon EC2 (Elastic Compute Cloud) is AWS's core service for renting virtual servers in the cloud. It provides scalable computing power for hosting applications, websites, databases, or running any software you'd typically run on a physical machine. Rather than buying and maintaining your own hardware, you're essentially renting a computer in Amazon's data centers and paying only for what you use.

The "elastic" part of the name refers to how quickly you can scale resources up or down based on demand. An EC2 "instance" is simply a virtual server—a software-based computer running on Amazon's physical infrastructure. You get full control over the operating system, installed software, and configuration settings.

• Virtual servers: Rent computing capacity without managing physical hardware
• Resizable resources: Adjust CPU, RAM, and storage based on your workload
• Pay-as-you-go pricing: Only pay for the compute time actually used
• Full control: Choose operating systems, software, and security configurations

This flexibility makes EC2 suitable for everything from small personal websites to enterprise applications processing millions of transactions daily.

How Amazon Elastic Compute Cloud works

Getting started with EC2 follows a straightforward four-step process. First, you select an Amazon Machine Image (AMI), which serves as your starting template containing the operating system and any pre-installed software. Think of an AMI like a snapshot of a computer that's ready to boot up.

1. Launch an instance: Select an AMI template with your preferred OS and software configuration
2. Configure settings: Choose your instance type (determining processing power and memory) and attach storage volumes
3. Connect to the server: Access your instance via web browser console or SSH to install applications
4. Scale as needed: Add or remove instances and storage when workload demands change

Once running, your EC2 instance behaves like any other server. You can install applications, configure security settings, and manage it remotely from anywhere with an internet connection.

Key features of EC2 in AWS

Scalable compute capacity

EC2 allows you to increase or decrease server resources within minutes to match demand. Auto-scaling capabilities can automatically respond to traffic patterns, launching additional instances during peak periods and terminating them when demand drops. This means you're not paying for idle capacity during slow periods.

Multiple operating system support

The service supports Linux, Windows, and macOS environments. You can use AWS-provided images or bring your own custom configurations, giving you flexibility in how you set up your computing environment.

Elastic IP addresses

Elastic IP addresses are static public IP addresses that can be reassigned between instances. If you replace or upgrade an instance, you can move the same IP address to the new instance. This keeps your endpoints consistent without requiring DNS changes.

Amazon CloudWatch integration

CloudWatch is AWS's monitoring service for tracking instance performance. It provides metrics like CPU utilization, network traffic, and disk usage—data that helps you understand how your applications perform and when you might benefit from additional resources.

Automated scaling and load balancing

Auto Scaling groups add or remove instances based on rules you define. Meanwhile, Elastic Load Balancing distributes incoming traffic across multiple instances, improving both availability and fault tolerance. Together, these features help applications handle variable traffic without manual intervention.

Types of EC2 instances on AWS

AWS organizes instance types into families optimized for different workloads. Choosing the right family depends on whether your application requires more processing power, memory, storage speed, or a balance of all three.

Instance Family	Optimized For	Best Used When
General Purpose	Balanced compute, memory, networking	Running web servers, small databases
Compute Optimized	High-performance processors	Batch processing, gaming servers
Memory Optimized	Fast performance for large datasets	In-memory databases, real-time analytics
Storage Optimized	High sequential read/write access	Data warehousing, distributed file systems
Accelerated Computing	GPU and hardware accelerators	Machine learning, graphics rendering

General purpose instances

General purpose instances provide balanced resources suitable for diverse workloads. They're commonly used for web applications, development environments, and small to medium databases where no single resource type dominates requirements.

Compute optimized instances

Designed for CPU-intensive tasks, compute optimized instances excel at scientific modeling, batch processing jobs, and high-performance web servers. If your application spends most of its time doing calculations rather than waiting for data, this family fits well.

Memory optimized instances

When your workload processes large datasets in memory, memory optimized instances deliver the performance you're looking for. Real-time big data analytics and in-memory caching are typical use cases where fast access to large amounts of RAM matters most.

Storage optimized instances

Storage optimized instances focus on high sequential read/write access to large datasets on local storage. Data warehousing and log processing applications benefit most from this configuration, where moving data quickly to and from disk is the priority.

Accelerated computing instances

Equipped with GPUs or custom hardware accelerators, accelerated computing instances handle machine learning training, graphics rendering, and high-performance computing workloads. The specialized hardware dramatically speeds up certain types of calculations compared to standard processors.

Common use cases for Amazon EC2

Web application hosting

Organizations host websites and web applications on EC2 servers, taking advantage of the ability to scale during traffic spikes. A retail site, for example, can add capacity during holiday shopping seasons and scale back down afterward.

Big data and analytics processing

EC2 supports running analytics workloads and processing large datasets using compute clusters. The ability to spin up powerful instances temporarily makes large-scale data processing cost-effective since you only pay for the hours you actually use.

Machine learning workloads

Data science teams train ML models on GPU instances and deploy inference endpoints for production use. The variety of accelerated computing options supports everything from initial experimentation to serving predictions at scale.

Development and testing environments

Teams spin up temporary environments for software development and QA testing. When testing completes, instances can be terminated to avoid ongoing costs. This approach gives developers production-like environments without the expense of permanent infrastructure.

High performance computing

Complex simulations and scientific calculations requiring massive compute power run on EC2's most powerful instance types. Researchers often use clusters of instances working in parallel to tackle problems that would take years on a single machine.

Amazon EC2 pricing and cost models

On-demand instances

With on-demand pricing, you pay by the hour or second with no long-term commitment. This model works well for unpredictable workloads, testing, and short-term projects where flexibility matters more than cost optimization.

Reserved instances

Committing to one or three-year terms provides significant discounts compared to on-demand pricing. Steady-state workloads with predictable usage benefit most from this approach since you're trading flexibility for lower rates.

Spot instances

Spot pricing lets you bid on unused EC2 capacity at steep discounts. However, AWS can reclaim spot instances with short notice when demand for that capacity increases. This makes spot instances suitable only for fault-tolerant, interruptible workloads like batch processing.

Savings plans

Savings plans offer a flexible pricing model based on committed hourly spend rather than specific instance types. Organizations wanting savings without locking into particular configurations often prefer this option over reserved instances.

AWS free tier for EC2

New AWS accounts receive limited free EC2 usage, allowing organizations to experiment with the service before committing budget to production workloads. This provides a low-risk way to learn how EC2 works in practice.

EC2 vs Lambda and other AWS compute options

EC2 isn't the only compute option in AWS. Understanding when to choose EC2 over alternatives helps you select the right tool for each workload.

Service	Best For	Key Difference from EC2
AWS Lambda	Event-driven, short-running functions	Serverless, no server management required
Amazon ECS	Containerized applications	Manages Docker containers on EC2 or Fargate
AWS Fargate	Serverless containers	No EC2 instance management needed
Amazon Lightsail	Simple virtual private servers	Simplified pricing for small projects

EC2 provides the most control and customization but requires more hands-on management. Lambda and Fargate abstract away server management entirely, while Lightsail offers a simpler experience for straightforward hosting.

Choosing the right cloud compute solution for your organization

Several factors influence whether EC2 fits your organization's requirements:

• Workload requirements: Match instance types to your application's compute, memory, and storage demands
• Cost predictability: Choose pricing models aligned with your budget planning processes
• Technical expertise: Consider your team's ability to manage cloud infrastructure
• Scalability patterns: Evaluate whether your workloads have variable or steady demand

Organizations evaluating cloud-based platforms for talent management can book a demo with Engagedly to see how modern SaaS solutions leverage scalable cloud infrastructure to deliver reliable performance.

Frequently asked questions about Amazon EC2

Is Amazon EC2 just a virtual machine?

EC2 instances are virtual machines at their core, but the service includes additional features like auto-scaling, load balancing, and integrated monitoring that extend well beyond basic VM functionality. The surrounding ecosystem of tools and integrations differentiates EC2 from running a VM on your own hardware.

What is the difference between Amazon EC2 and Amazon S3?

EC2 provides compute capacity—virtual servers for running applications—while S3 provides object storage for files and data. They serve different purposes but often work together, with applications running on EC2 storing and retrieving data from S3.

How long can an Amazon EC2 instance run continuously?

EC2 instances can run indefinitely as long as the account remains in good standing and the instance isn't manually stopped or terminated. There's no built-in time limit on how long an instance can stay running.

What happens when an Amazon EC2 instance is stopped?

When stopped, the instance retains its configuration and attached EBS storage volumes but loses any data stored in instance memory. Billing for compute time pauses until the instance restarts, though storage charges continue.