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What is Virtual Private Cloud (VPC)? How It Works & the Benefits

Posted on by Jake Fellows | Updated:
Home > Blog > Cloud > What is Virtual Private Cloud (VPC)? How It Works & the Benefits

In the past few years, virtual private clouds (VPCs) have been gaining more popularity among businesses of all sizes — and for good reasons. VPCs are often seen as combining the best of both worlds (as in private and public) when it comes to cloud computing. 

They offer the privacy and security of having your own private solution implemented but with the agility and affordability of a public cloud. 

What is Virtual Private Cloud (VPC)?

You might wonder what does VPC stand for and what is VPC in general?  Virtual Private Cloud (VPC) is a secure and isolated private space hosted within a public cloud. 

This way, any company can create its own private cloud-based environment on what is practically shared public infrastructure. The company would then have near complete control over its own network, with configurations that can be drastically different from all the other public cloud tenants. 

What is VPC Used For? 

Anything that a regular private cloud can do, from running code to storing data to hosting web applications, VPC can also do. The only limitation is that normally a virtual private cloud is hosted by a public cloud provider. 

Here’s an illustrative analogy. 

Imagine a street in the business district lined with office buildings. Smaller ones are usually private clouds; large ones can be public clouds. 

A virtual public cloud is a separate company office in one of the big public towers. While no one can just go into the office without authorization, and the company can outfit and renovate the office the way they like, they are still located within the public environment of an office building.

How Does VPC Work?

How Does VPC Work

Once you know what VPC is, you might wonder how these virtual clouds actually work? 

The key is the word virtual. 

VPCs have become widely available due to the virtualization technology, or the ability to create an abstraction layer on top of server hardware. A virtualized layer then can be divided into multiple virtual machines (VMs), where each can work as a completely independent computer, with its own operating system and software.

Companies like VMware have become pioneers in virtualization, and VMware hosting is now a popular solution for companies of all sizes. 

A virtual private cloud creates a private space within a public cloud and isolates some computing resources for itself. 

Some examples of such isolation are unique IP addresses, a VLAN, and a VPN. 

  1. IP addresses are usually similar on a public cloud. In a VPC, however, virtualization defines a subnet of IP addresses to only be used by the company that owns that VPC. These IP addresses then won’t be visible or accessible by the wider network. 
  2. VLAN also helps partition the network, just like a subnet but at a different level. If LAN is a local area network (a group of computers connected to each other), VLAN is a virtual LAN, created to bring the company’s computers together while separating them from the rest. 
  3. VPN is a virtual private network that encrypts the company’s traffic and makes it indecipherable to anyone else. 

So, VPC normally has a dedicated set of IP addresses and a separate VLAN that is only available for the computers within it. What’s more, the company connects to its VPC through a VPN, ensuring that its data is not visible to public cloud tenants or anyone else. 

As such, virtual private clouds make use of the scalability, redundancy, and accessibility that traditional public clouds provide while enjoying the isolation and security of a private cloud.

The Difference Between Virtual Private Cloud and Private Cloud

It’s very common to confuse a virtual private cloud and a regular private cloud. After all, they sound so similar; but they couldn’t be more different. 

A regular private cloud is a single-tenant environment, a complete service created for a single company to use. A separate office building, you can say. 

A public cloud is created on shared multi-tenant infrastructure, which dozens and even hundreds of customers can access (although everyone’s data remains private). 

Think of AWS or Microsoft Azure as some of the most recognizable examples. 

A VPC, however, is a private cloud within a public cloud, bringing you the advantages of both. Finally, you don’t have to weigh in private cloud vs public cloud anymore. 

What Are the Advantages of Virtual Private Cloud?

A virtual private cloud can be a great solution for any company looking for scalability, flexibility, good performance, and outstanding security, all without breaking the bank. 

One of the best aspects of being hosted on a public cloud is near infinite scalability. VPC’s customers can simply add more resources in real time, whenever they need to.

Since VPC is practically self-contained, it offers the flexibility of being hosted on a public cloud but also connected to a dedicated server infrastructure in the future, if there’s ever such a need. 

If your VPC runs a global web application, being hosted on a cloud means better performance for users worldwide than on-premise servers. 

As a rule, VPC providers spend lots of time and resources to make sure their systems always remain secure and up-to-date. This is especially important for small and medium-sized businesses that often can’t dedicate the same amount of attention to data security.

Finally, since the underlying infrastructure in VPCs is shared with other tenants, it’s usually much more cost-effective. 

Try Virtual Private Cloud Today

As you can see, virtual private clouds are great for running everything from up-and-coming ecommerce websites to machine-learning models that require variable resources to simple enterprise websites.
Do you still have questions about how exactly virtual private clouds can fulfill your company’s needs? Just contact Liquid Web and one of our technicians would be happy to walk you through your particular situation and suggest the most optimal solution.
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About the Author

Jake Fellows

Jake Fellows is the Sophisticated Hosting Product Manager for Liquid Web's Managed Hosting products and services. He has over 10 years experience involving several fields of the technology industry, including hosting, healthcare, and IT-system architecture. On his time off, he can be found in front of some form of screen enjoying movies, video games, or researching into one of his many technical side projects.

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