Amazon is on a roll! They already have their S3 grid storage system and now they’ve release their EC2 elastic compute cloud. Basically image (Amazon Machine Image AMI) driving, instant virtual servers that can be setup and running in minutes. From what I can see its very similar if not using general virtualization technology.

You setup an AMI image or can choose from several already available that have various open source server stacks (such as Apache, MySQL etc) pre-installed. Once uploaded to their compute cloud, these servers can be brought up and act just like a regular linux VPS or dedicated server would. Just like the S3 service, since it comes from Amazon it comes with the scalability, stability and reliability we’ve known Amazon to have.

And just what does “Elastic” mean?:

“Amazon EC2 enables you to increase or decrease capacity within minutes, not hours or days. You can commission one, hundreds or even thousands of server instances simultaneously. Of course, because this is all controlled with web service APIs, your application can automatically scale itself up and down depending on its needs.”

So what exactly are you getting from them?:

“You have complete control of your instances. You have root access to each one, and you can interact with them as you would any machine. Each instance predictably provides the equivalent of a system with a 1.7Ghz Xeon CPU, 1.75GB of RAM, 160GB of local disk, and 250Mb/s of network bandwidth.”

The pricing is pretty good as well.

* Pay only for what you use.
* $0.10 per instance-hour consumed (or part of an hour consumed).
* $0.20 per GB of data transferred outside of Amazon (i.e., Internet traffic).
* $0.15 per GB-Month of Amazon S3 storage used for your images (charged by Amazon S3).

$0.10 cents per hour, roughly $70 per month for a server with 99.99% uptime with resources roughly equivalent to almost 2Ghz and almost 2GB RAM. Another great thing is that if you setup your servers to work with the S3 storage service, any bandwidth transfered between the EC2 server and S3 is free.

These two services tethered together are quite the dynamic duo. As some have pointed out, now all they need is a grid distributed SQL type data storage engine to interface with S3 and EC2 and people can make entire web apps simply built upon these services. I know this is definitely a viable option to switch to for SugarStats a little while down the line or even perhaps when we launch.

This just start to really open up opportunities for new services and companies needing these types of resources. Need to scale your web service? No need to buy another managed dedicated box, if you’re app’s software is configured to do so, just throw up another image and you’ve got almost instant scalability. At this time, you can setup up to 20 image virtual servers and need to contact Amazon for more. Check out the Amazon EC2 Elastic Compute Cloud.