In traditional data centers, you would have to buy or lease physical machines and have spare capacity to deal with additional web or user traffic. In the new world, virtual machines were one of the first public cloud offerings. You can think of it as similar to physical boxes, where you can install an operating system, remotely connect via SSH or RDP, and install applications and services. I would say that virtual machines have been one of the key building blocks for start-up companies to be successful. It gave them the ability to go to market with only small capital investments and to scale out with an increase in their web traffic and user volumes. This was something that previously only large organizations could afford, given the big upfront costs of physical hardware.

The advantages of virtual machines are the pay per usage, choice of instance type, and dynamic allocation of storage, giving your organization full flexibility to rent hardware within minutes rather than wait for physical hardware to be purchased. Virtual machines also provides security, which is managed by the cloud provider. In addition, they provide multi-region auto-scaling and load balancing, again managed by the cloud provider and available almost at the click of a button. There are many virtual machines available, for example, Amazon EC2, Azure VMs, and Google Compute Engine.

However, they do have some drawbacks. The main drawback is that it takes a few minutes to scale. So, any machine that needs to be spun up takes a few minutes, making it impossible most to scale quickly upon request. There is also an effort in terms of configuration where the likes of Chef or Puppet are required for configuration management. For example, the operating system needs to be kept up to date.

Another drawback is that you still need to write the logic to poll or subscribe to other managed services, such as streaming analytics services. In addition, you still pay for idle machine time. For example, when your services are not running, the virtual machines are still up and you're still paying for that time even if they're not being actively used.