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Aside: I looked into AWS a couple weeks ago, to play with a simple webapp idea, but the myriad choices, acronyms and signups confused me, and there was [seemed to be] no free options for getting started, and initial traction. It seems focussed on sophisticated enterprise users (nothing wrong with that). So, I went with google's App Engine, which was much simpler, and has been great. These micro-instances seem the same.

Did I give up too soon?

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If you can make your app fit within the significant limitations of App Engine, then it is a great service. I've used it for several projects from basic CMS to AJAX chat.

That said, sooner or later you'll want to do something that should seem possible on App Engine (e.g., image transformations with BufferedImage) and you'll hit a brick wall.

That's when I turn to a generic Ubuntu image running on EC2. It's not free, but with spot pricing it's awfully cheap. I expect spot pricing for this newest micro size to stabilize at around $10 a month.

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