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Cloud computing is Internet-based ("cloud") development and use of computer technology ("computing"). The cloud is a metaphor for the Internet (based on how it is depicted in computer network diagrams) and is an abstraction for the complex infrastructure it conceals. It is a style of computing in which IT-related capabilities are provided “as a service”, allowing users to access technology-enabled services from the Internet ("in the cloud") without knowledge of, expertise with, or control over the technology infrastructure that supports them. According to a 2008 paper published by IEEE Internet Computing "Cloud Computing is a paradigm in which information is permanently stored in servers on the Internet and cached temporarily on clients that include desktops, entertainment centers, table computers, notebooks, wall computers, handhelds, sensors, monitors, etc."

Cloud computing is a general concept that incorporates software as a service (SaaS), Web 2.0 and other recent, well-known technology trends, in which the common theme is reliance on the Internet for satisfying the computing needs of the users. For example, Google Apps provides 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 are today powered by grids, have autonomic characteristics and are billed 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 etc.