What is Amazon EC2? Definition, Types and Pricing

Amazon EC2, short for Amazon Elastic Compute Cloud, is a web service provided by Amazon Web Services (AWS) that allows users to rent virtual servers, known as instances, in the cloud. These instances provide scalable computing capacity, enabling users to easily and flexibly run applications and perform various tasks without having to invest in physical hardware. EC2 offers a wide range of instance types with different configurations to meet the specific needs of users, such as CPU, memory, storage, and networking capabilities. It is a popular solution for hosting websites, running applications, and handling large-scale data processing workloads in a cost-effective and efficient manner.

Key features of Amazon EC2 include:

• virtual computing environments (instances), 
• preconfigured templates (Amazon Machine Images), 
• instance types, 
• secure login information, 
• storage volumes, 
• multiple physical locations (Regions and Availability Zones), 
• firewall security groups, 
• static IPv4 addresses, 
• metadata tags, 
• virtual private clouds (VPCs), and more.

EC2 Instance Types

General Purpose Instances

• needs for compute, memory, and networking are equivalent
• Optimal for:
• application servers
• gaming servers
• backend servers for enterprise applications
• small and medium databases

Compute-optimized instances

• compute-bound applications that benefit from high-performance processors
• Optimal for:
• high-performance web servers
• compute-intensive application servers
• dedicated gaming servers

Memory-optimized instances

• fast performance for workloads that process large datasets in memory
• Optimal for:
• high-performance database
• real-time processing of a large amount of unstructured data

Advanced computing instances

• use hardware accelerators, or coprocessors to perform functions more efficiently 
• Optimal for:
• floating-point number calculations 
• graphics processing
• data pattern matching
• graphics applications, game streaming, and application streaming

Storage optimized instances

• workloads that require high, sequential read and write access to large datasets on local storage
• Optimal for:
• distributed file systems
• data warehousing applications
• high-frequency online transaction processing (OLTP)
• high IOPS requirement application. IOPS is short for Input/output operations per second, a metric for storage device performance. It measures how many input or output operations a storage device performs per second.

EC2 Pricing

On-demand	For short-term, irregular workloads that cannot be interrupted.	Instances run until you stop them and you pay for the compute time you use. Example: Developing and testing applications and running applications with unpredictable usage patterns.
Amazon EC2 Savings Plans	For the consistent amount of compute usage for 1 year or 3-year. (72% savings)	Any usage up to the commitment is charged at the discounted Savings Plan rate.  Any usage beyond is charged using On-Demand rates.
Reserved Instances	Workloads that last a year or longer. They are billing discounted to the use of On-Demand Instances in your account.	Standard & Convertible - 1 or 3 years, Scheduled - 1 year.  At the end of the term, usage is charged with On-Demand rates until you terminate the instance or purchase a new Reserved instance.
Spot Instances	Workloads with flexible start and end times, or that can withstand interruptions. (90% savings) They use unused EC2 computing capacity.	Example: For a background processing job that can start and stop as needed (such as the data processing job for a customer survey). You want to start and stop the processing job without affecting the overall operations of your business.
Dedicated Hosts	Physical servers with Amazon EC2 instance capacity that is fully dedicated to your use.	The most expensive option.