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A virtual private cloud (VPC) is the logical division of a service provider's public cloud multi-tenant architecture to support private cloud computing. This model enables an enterprise to achieve the benefits of private cloud -- such as more granular control over virtual networks and an isolated environment for sensitive workloads -- while still taking advantage of public cloud resources.
The terms private cloud and virtual private cloud are sometimes used incorrectly as synonyms. There is a distinct difference -- in a traditional, on-premises private cloud model, an enterprise's internal IT department acts as a service provider and the individual business units act as tenants. With a VPC, a public cloud provider acts as the service provider and the cloud's subscribers are the tenants.
How a virtual private cloud works
In a virtual private cloud model, the public infrastructure-as-a-service (IaaS) provider is responsible for ensuring that each private cloud customer's data remains isolated from every other customer's data both in transit and inside the cloud provider's network. This can be accomplished through the use of security policies requiring some -- or all -- of the following elements: encryption, tunneling, private IP addressing or allocating a unique virtual local area network (VLAN) to each customer.
A virtual private cloud user can define and directly manage network components, including IP addresses, subnets, network gateways and access control policies.
Benefits and challenges of virtual private clouds
As mentioned above, one of the biggest benefits of VPCs is that they enable an enterprise to tap into some of the benefits of private clouds, such as more granular network control, while still using off-premises, public cloud resources in a highly scalable, pay-as-you-go model.
Another benefit of VPCs is enabling a hybrid cloud deployment. An enterprise can use a VPC as an extension of its own data center without dealing with the complexities of building an on-premises private cloud.
Despite the benefits of VPCs, they can also introduce some challenges. For example, an enterprise might face some complexity when configuring, managing and monitoring its virtual private network (VPN).
In addition, while VPCs offer an isolated environment within a public cloud in which workloads can run, they are still hosted outside an enterprise's own data center. This means that businesses in highly regulated industries with strict compliance requirements might face limitations on which kinds of applications and data they can place in a VPC.
Before it commits to a VPC, an enterprise should also verify that all of the resources and services it wants to use from its chosen public cloud provider are available via that provider's VPC.
Virtual private cloud providers
Most leading public IaaS providers, including Amazon Web Services (AWS), Microsoft Azure and Google, offer VPC and virtual network services.