The main selling point for EC2 isn't that it's cheap, it's that it's easy and fast to scale up/down and that you get managed failover. For that ease you pay a h

The main selling point for EC2 isn't that it's cheap, it's that it's easy and fast to scale up/down and that you get managed failover. For that ease you pay a hefty premium. A lot of companies that have highly variable demand will often go with EC2 because if they get a sudden spike in demand they can quickly spin up 3 or 4 new instances to load balance across, and then when the demand dies off they can spin them all back down to save money. Doing something similar with dedicated hardware doesn't really work, you either end up without enough hardware to meet demand, or else you've got a bunch of hardware sitting around idle most of the time.