Cloud computing is Internet ("cloud") based development and use of computer technology ("computing"). It is a style of computing in which dynamically scalable and often virtualised resources are provided as a service over the Internet. Users need not have knowledge of, expertise in, or control over the technology infrastructure "in the cloud" that supports them.

The concept incorporates infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS) as well as Web 2.0 and other recent (ca. 2007-2009) technology trends which have the common theme of reliance on the Internet for satisfying the computing needs of the users. Examples of SaaS vendors include Salesforce.com and Google Apps which provide common business applications online that are accessed from a web browser, while the software and data are stored on the servers.

The term cloud is used as a metaphor for the Internet, based on how the Internet is depicted in computer network diagrams, and is an abstraction for the complex infrastructure it conceals

Brief

Comparisons
Cloud computing is often confused with grid computing ("a form of distributed computing whereby a 'super and virtual computer' is composed of a cluster of networked, loosely-coupled computers, acting in concert to perform very large tasks"), utility computing (the "packaging of computing resources, such as computation and storage, as a metered service similar to a traditional public utility such as electricity") and autonomic computing ("computer systems capable of self-management").

Indeed many cloud computing deployments as of 2009 depend on grids, have autonomic characteristics and bill like utilities — but cloud computing can be seen as a natural next step from the grid-utility model. Some successful cloud architectures have little or no centralised infrastructure or billing systems whatsoever, including peer-to-peer networks like BitTorrent and Skype and volunteer computing like SETI@home.

Architecture
The majority of cloud computing infrastructure as of 2009 consists of reliable services delivered through data centers and built on servers with different levels of virtualization technologies. The services are accessible anywhere that has access to networking infrastructure. The Cloud appears as a single point of access for all the computing needs of consumers. Commercial offerings need to meet the quality of service requirements of customers and typically offer service level agreements. Open standards are critical to the growth of cloud computing and open source software has provided the foundation for many cloud computing implementations.

Characteristics
As customers generally do not own the infrastructure, they merely access or rent, they can avoid capital expenditure and consume resources as a service, paying instead for what they use. Many cloud-computing offerings have adopted the utility computing model, which is analogous to how traditional utilities like electricity are consumed, while others are billed on a subscription basis. Sharing "perishable and intangible" computing power among multiple tenants can improve utilization rates, as servers are not left idle, which can reduce costs significantly while increasing the speed of application development. A side effect of this approach is that "computer capacity rises dramatically" as customers do not have to engineer for peak loads. Adoption has been enabled by "increased high-speed bandwidth" which makes it possible to receive the same response times from centralized infrastructure at other sites.

Economics
 
Cloud computing users can avoid capital expenditure (CapEx) on hardware, software and services, rather paying a provider only for what they use. Consumption is billed on a utility (e.g. resources consumed, like electricity) or subscription (e.g. time based, like a newspaper) basis with little or no upfront cost. Other benefits of this time sharing style approach are low barriers to entry, shared infrastructure and costs, low management overhead and immediate access to a broad range of applications. Users can generally terminate the contract at any time (thereby avoiding return on investment risk and uncertainty) and the services are often covered by service level agreements with financial penalties.

According to Nicholas Carr the strategic importance of information technology is diminishing as it becomes standardised and cheaper. He argues that the cloud computing paradigm shift is similar to the displacement of electricity generators by electricity grids early in the 20th century.

Companies
Providers including Amazon, Google and Yahoo exemplify the use of cloud computing. It is being adopted by individual users through large enterprises including General Electric, L'Oréal, and Procter & Gamble.