Why is AWS more economical than traditional data centers for applications with varying compute workloads?

AWS is more economical than traditional data centers for applications with varying compute workloads primarily because Amazon EC2 instances can be launched on-demand when needed. This flexibility allows organizations to scale their compute resources up or down based on real-time requirements without the need for significant upfront investments in hardware or long-term commitments that are common in traditional data centers.

On-demand capacity allows businesses to pay only for the resources they consume, making it cost-effective for applications that may experience fluctuating workloads. For instance, if an application requires a surge of compute power during peak times, additional EC2 instances can be provisioned quickly to handle the load and then terminated once demand decreases, thereby avoiding unnecessary expenditures.

This model contrasts with traditional data centers, where resources are typically over-provisioned to handle peak loads, leading to wasted capacity and costs during idle periods. AWS's pay-as-you-go pricing model aligns costs more closely with actual usage, offering significant savings and efficiency.