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I need to setup a web server and a database server on EC2. It should be easy to migrate to another service provider later.

Currently, I have a web server and a database server, each running on separate EC2 micro instances with software installed there remotely.

Can we run a vagrant box on these micro instances with pre-installed and pre-configured softwares like LAMP stack and use that instead. So I will end with 2 vagrant boxes , one for web server another for database server.

Amazon provides already means to copy an instance but it is copied to another EC2 instance only probably .. If there is need to move to some other provider, it will be same process of re-installing all. So, an own virtual box installed on Amazon's virtual box is what i was looking into..

I don't know how good or bad it is.. I doubt if this will affect performance as well. Please share your views. Target is to have env prepared locally and have flexibility to deploy it on any service provider easily.

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According to me, running vagarant inside your AWS box is not the smartest solution. 

You might want to look into vagarant AWS provider. thatc will allow you to setup as well as provision your AWS boxes with Vagarant. If you decide to  use Puppet and Chef to provision your servers then you woll also have a very portable "scripted" installed for your servers.

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