This is something that I feel so many people don't understand about EC2 (ELASTIC Cloud Compute). If you are using it like a traditional VPS provider, you are likely over-paying for something you could get cheaper elsewhere. If you are just looking at a price comparison to another VPS provider or even the private cloud, you are doing it wrong. One must consider how much (or little) ability they need to scale/up AND down at very short notice.

EC2 is a boon for those that need to add and remove capacity quickly. This is the appeal of EC2. It's not going to blow your socks off as far as performance per dollar. It is going to blow you away with its flexibility. If you don't need to scale up AND down quickly and regularly, EC2 is probably not a good fit for you. With EC2, you are paying for that flexibility.

Netflix is one of the penultimate examples of "doing EC2 correctly". Their traffic is extremely bursty. They are constantly automatically scaling up/down, and they do this and so many other things without human intervention.

I don't think penultimate means what you think it means.

> If you don't need to scale up AND down quickly and regularly, EC2 is probably not a good fit for you. With EC2, you are paying for that flexibility.

If EC2 customers realised this, they'd lose 90%+ of their customer base.

Right now, probably so. Though, to AWS' credit, they've been "diversifying" in developing some of these other complementary services (RDS, Route53, ElastiCache, Search, DynamoDB, Elastic Transcoder). It's getting to the point where EC2 is a good fit for those who want less infrastructure responsibility (and are willing to pay for it).

If RDS/ElastiCache were cheaper, I think it'd be a lot easier to make the case for EC2 for startups and smaller companies that don't need the auto-scaling features. Even as a smaller business, it's a lot better for us to spend a little more on infrastructure in order to avoid hiring additional people to keep us running.