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Every one defines the cloud in their own way, here is my take on it. Companies whose main business is not
Computer related, they outsource their IT work to some computer consulting firm. It is because IT is not
their main business and some times it makes sense to hand it over. Similarly, for application development
companies - the focus is application development, not hosting the applications. In addition to the application
developers, they need to have IT people, hardware to host the apps. For some companies it makes sense to
outsource the IT and hardware. In other words, you are outsourcing your application to a different company.
Application outsourcing used to be to hosting companies, but that's changing to the cloud due to its
infrastructure. The cloud makes it very easy to scale an app for rapid growth compared to the hosting
companies. Cloud will take away all the hardware management and IT risks from you.

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Cloud is not new. Standard apps such as your personal email(Gmail, Yahoo Mail, and Live Mail etc) has
always been there on the servers in the cloud. Lots of companies are moving away from in-house
Exchange/Lotus Notes servers and outsourcing their mail to mail hosting companies. Slowly, the paradigm
shifted from desktops apps to intranet hosted apps to SaaS (Software as a Service). Third party apps such
as time tracking, project management, office, CRM, e-commerce became subscription based services. In
other words, you don't have to install and manage these apps in-house, instead the service provider will
manage these for you for a subscription fee. Now the paradigm shift is, moving the custom apps into third
party infrastructure for a subscription fee. The "Cloud" buzz started when Amazon introduced EC2 and
picked up there after by Google's App Engine and Microsoft's Azure. Since these companies use the high end
sophisticated infrastructure with the help of virtualization software to run their apps and with the promise of
running your app in the same infrastructure, boosted lots of companies to move their apps to the cloud.

Cloud computing is location independent computing, whereby shared servers provide resources,
software, and data to computers and other devices on demand, as with the electricity grid

Clouds often appear as single points of access for consumers' computing needs

Charactertics

The fundamental concept of cloud computing is that the computing is "in the cloud" i.e. the processing
(and the related data) is not in a specified, known or static place(s). This is in opposition to where the
processing takes place in one or more specific servers that are known.
xenerally, cloud computing customers do not own the physical infrastructure, instead avoiding capital
expenditure by renting usage from a third-party provider. They consume resources as a service and pay
only for resources that they use. Many cloud-computing offerings employ the utility computing model,
which is analogous to how traditional utility services (such as electricity) are consumed, whereas others
bill on a subscription basis.

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,[30] the systems architecture of the software systems involved in the delivery of cloud
computing, typically involves multiple 



 communicating with each other over
application programming interfaces, usually web services

Cloud Computing Types