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.
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 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.
The majority of cloud computing infrastructure 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.
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.
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.
Providers including Amazon, Google and Yahoo exemplify the use of cloud computing . As of 2009, use was increasing among individuals in the United States, as well as large enterprises including General Electric, L'Oréal, and Procter & Gamble. 
The Cloud is a term with a long history in telephony, which has in the past decade, been adopted as a metaphor for internet based services, with a common depiction in network diagrams as a cloud outline.
The underlying concept dates back to 1960 when John McCarthy opined that "computation may someday be organized as a public utility"; indeed it shares characteristics with service bureaus which date back to the 1960s. The term cloud had already come into commercial use in the early 1990s to refer to large ATM networks. By the turn of the 21st century, the term "cloud computing" had started to appear, although most of the focus at this time was on Software as a service (SaaS).
In 1999, Salesforce.com was established by Marc Benioff, Parker Harris, and his fellows. They applied many technologies of consumer web sites like Google and Yahoo! to business applications. They also provided the concept of "On demand" and "SaaS" with their real business and successful customers. The key for SaaS is being customizable by customer alone or with a small amount of help. Flexibility and speed for application development have been drastically welcomed and accepted by business users.
IBM extended these concepts in 2001, as detailed in the Autonomic Computing Manifesto http://www.research.ibm.com/autonomic/index.html -- which described advanced automation techniques such as self-monitoring, self-healing, self-configuring, and self-optimizing in the management of complex IT systems with heterogeneous storage, servers, applications, networks, security mechanisms, and other system elements that can be virtualized across an enterprise.
Amazon.com played a key role in the development of cloud computing by modernizing their data centres after the dot-com bubble and, having found that the new cloud architecture resulted in significant internal efficiency improvements, providing access to their systems by way of Amazon Web Services in 2002 on a utility computing basis.
2007 saw increased activity, with Google, IBM, and a number of universities embarking on a large scale cloud computing research project, around the time the term started gaining popularity in the mainstream press. It was a hot topic by mid-2008 and numerous cloud computing events had been scheduled.
In August 2008, Gartner Research observed that "organizations are switching from company-owned hardware and software assets to per-use service-based models" and that the "projected shift to cloud computing will result in dramatic growth in IT products in some areas and in significant reductions in other areas."
The Cloud spans many borders and "may be the ultimate form of globalization." As such it becomes subject to complex geopolitical issues: providers must satisfy myriad regulatory environments in order to deliver service to a global market. This dates back to the early days of the Internet, where libertarian thinkers felt that "cyberspace was a distinct place calling for laws and legal institutions of its own"; author Neal Stephenson envisaged this as a tiny island data haven called Kinakuta in his classic science-fiction novel Cryptonomicon.
Despite efforts (such as US-EU Safe Harbor) to harmonise the legal environment, providers like Amazon Web Services cater to the major markets (typically the United States and the European Union) by deploying local infrastructure and allowing customers to select "availability zones." Nonetheless, there are still concerns about security and privacy from individual through governmental level, e.g., the USA PATRIOT Act and use of national security letters and the Electronic Communications Privacy Act's Stored Communications Act.
In March 2007, Dell applied to trademark the term "cloud computing" () in the United States. The "Notice of Allowance" it received in July 2008 was canceled on August 6, resulting in a formal rejection of the trademark application less than a week later.
On 30 September 2008, USPTO issued a "Notice of Allowance" to CGactive LLC () for "CloudOS". A cloud operating system is a generic operating system that "manage[s] the relationship between software inside the computer and on the Web", such as Microsoft Azure . Good OS LLC also announced their "Cloud" operating system on 1 December 2008 .
Richard Stallman, founder of the Free Software Foundation, believes that cloud computing endangers liberties because users sacrifice their privacy and personal data to a third party. In November 2007, the Free Software Foundation released the Affero General Public License, a version of GPLv3 designed to close a perceived legal loophole associated with Free software designed to be run over a network, particularly software as a service. An application service provider is required to release any changes they make to Affero GPL open source code.
Corporations or end-users wishing to avoid losing or not being able to access their data should research vendors' policies on data security before using vendor services. The technology analyst and consulting firm, Gartner, lists seven security issues which one should discuss with a cloud-computing vendor:
In practice, one can best determine data-recovery capabilities by experiment: asking to get back old data, seeing how long it takes, and verifying that the checksums match the original data. Determining data security is harder. A tactic not covered by Gartner is to encrypt the data yourself. If you encrypt the data using a trusted algorithm, then regardless of the service provider's security and encryption policies, the data will only be accessible with the decryption keys. This leads to a follow-on problem: managing private keys in a pay-on-demand computing infrastructure.
A cloud application leverages the Cloud in software architecture, often eliminating the need to install and run the application on the customer's own computer, thus alleviating the burden of software maintenance, ongoing operation, and support. For example:
A cloud client consists of computer hardware and/or computer software which relies on The Cloud for application delivery, or which is specifically designed for delivery of cloud services and which, in either case, is essentially useless without it. For example:
A cloud platform, such as Platform as a service, the delivery of a computing platform, and/or solution stack as a service, facilitates deployment of applications without the cost and complexity of buying and managing the underlying hardware and software layers. For example:
A cloud service includes "products, services and solutions that are delivered and consumed in real-time over the Internet" . For example, Web Services ("software system[s] designed to support interoperable machine-to-machine interaction over a network") which may be accessed by other cloud computing components, software, e.g., Software plus services, or end users directly. Specific examples include:
Cloud architecture, the systems architecture of the software systems involved in the delivery of cloud computing, comprises hardware and software designed by a cloud architect who typically works for a cloud integrator. It typically involves multiple cloud components communicating with each other over application programming interfaces, usually web services.
This closely resembles the Unix philosophy of having multiple programs doing one thing well and working together over universal interfaces. Complexity is controlled and the resulting systems are more manageable than their monolithic counterparts.
Cloud storage architecture is loosely coupled, where metadata operations are centralized enabling the data nodes to scale into the hundreds, each independently delivering data to applications or users.
Public cloud or external cloud describes cloud computing in the traditional mainstream sense, whereby resources are dynamically provisioned on a fine-grained, self-service basis over the Internet, via web applications/web services, from an off-site third-party provider who shares resources and bills on a fine-grained utility computing basis.
A hybrid cloud environment consisting of multiple internal and/or external providers "will be typical for most enterprises".
Private cloud and internal cloud are neologisms that some vendors have recently used to describe offerings that emulate cloud computing on private networks. These (typically virtualisation automation) products claim to "deliver some benefits of cloud computing without the pitfalls", capitalising on data security, corporate governance, and reliability concerns. They have been criticised on the basis that users "still have to buy, build, and manage them" and as such do not benefit from lower up-front capital costs and less hands-on management , essentially "[lacking] the economic model that makes cloud computing such an intriguing concept". 
While an analyst predicted in 2008 that private cloud networks would be the future of corporate IT, there is some contention as to whether they are a reality even within the same firm. Analysts also claim that within five years a "huge percentage" of small and medium enterprises will get most of their computing resources from external cloud computing providers as they "will not have economies of scale to make it worth staying in the IT business" or be able to afford private clouds.
A cloud computing provider or cloud computing service provider owns and operates live cloud computing systems to deliver service to third parties. Usually this requires significant resources and expertise in building and managing next-generation data centers. Some organisations realise a subset of the benefits of cloud computing by becoming "internal" cloud providers and servicing themselves, although they do not benefit from the same economies of scale and still have to engineer for peak loads. The barrier to entry is also significantly higher with capital expenditure required and billing and management creates some overhead. Nonetheless, significant operational efficiency and agility advantages can be realised, even by small organisations, and server consolidation and virtualization rollouts are already well underway. Amazon.com was the first such provider, modernising its data centers which, like most computer networks, were using as little as 10% of its capacity at any one time just to leave room for occasional spikes. This allowed small, fast-moving groups to add new features faster and easier, and they went on to open it up to outsiders as Amazon Web Services in 2002 on a utility computing basis.
The companies listed in the Components section are providers.
A user is a consumer of cloud computing. The privacy of users in cloud computing has become of increasing concern.  The rights of users is also an issue, which is being addressed via a community effort to create a bill of rights.  
A vendor sells products and services that facilitate the delivery, adoption and use of cloud computing. For example:
Other providers such as Reviora combine behind the scenes technologies to deliver software-as-a-service to customers.