Eucalyptus' design is modular. The Eucalyptus components have well-defined interfaces via WSDL (pronounced 'wiz-del') - the Web Services Description Language. According to dictionary.reference.com, WSDL is "(a)n XML format for describing network services as a set of endpoints operating on messages containing either 'document oriented' or 'procedure oriented' information." In other words, communication between the components happens in a well-defined but abstract manner, meaning that compenents can be changed or replaced with minimal to no configuration required on the part of other components in the system.
Eucalyptus allows most of these components to be installed on the same physical server, or on separate physical servers as business, security, and resource needs dictate. Components can be installed strategically close to the needed resources. For example, storage services can be installed close to physical storage resources, while management services can be installed close to the resources they manage.
This flexibility allows Eucalyptus to be extremely scalable and to acheive optimal performance in diverse environments. It can be installed on a very minimal setup - a two-server test cloud, for exammple - or installed on thousands of cores and terabytes of storage.
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