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Amazon Web Services currently has a limit of 10GB for the Amazon Machine Image (AMI) which becomes the root partition of your running EC2 instance. As you suggested, this doesn't leave a lot of room for installing other software. Your best bet is to utilize Elastic Block Storage (EBS) volumes as much as possible to store non-Operating System software and files. We certainly recommend using EBS volumes for storing all database datafiles, logfiles, etc.