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DevOps & InfrastructureAugust 25, 2006 2 min read 117Updated: June 22, 2026

Amazon EC2: Renting a Server by the Hour

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It’s August 2006, and Amazon just completed the second piece of the cloud puzzle. Earlier this year we got S3 for storage; today we got EC2 (Elastic Compute Cloud) for processing.

The concept is world-changing: instead of buying a physical server, rack-mounting it, and hooking it up to a T1 line, you just make an API call and a "Virtual Instance" is born in Amazon’s data center.

The Xen Hypervisor

Under the hood, EC2 is built on the Xen hypervisor. When you "launch" an instance, Amazon is carving out a slice of a massive physical server and giving it to you. You get a "public DNS," a certain amount of RAM, and a "compute unit."

# Launching a server from the command line (API tools)
ec2-run-instances ami-20b65349 -n 1 -g my-security-group

Elasticity is the Key

The "Elastic" in EC2 refers to the ability to scale up and down as needed. If your site gets a mention on Slashdot, you can spin up 10 more servers in minutes to handle the load. When the traffic dies down, you turn them off and stop paying. It’s "utility computing"-you pay for it like you pay for your water bill.

The Ephemeral Storage

One thing to watch out for: the local storage on an EC2 instance is "ephemeral." If the instance crashes or you turn it off, the data on the local disk is gone. You have to store your persistent data in S3 or a database. This forces us to design our applications as "stateless," which is a good architectural practice anyway.

Looking Ahead

EC2 is the end of the "Hardware Era" for startups. You no longer need a capital expenditure (CapEx) to start a tech company; you just need a credit card. Between S3 and EC2, Amazon has become the world’s most powerful landlord. Every developer should be learning how to manage these virtual instances, because the server room is moving to the cloud.


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