Cloud Computing: Eyes on the Skies

The tech credentials behind remote computing continue to gather, but the concept remains, well, cloudy to many. Here, a closer look

by Steve Hamm

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Editor's note: This is an extended version of a story published in the May 5, 2008, issue of BusinessWeek magazine.

When Hewlett-Packard's (HPQ) chief strategy officer, Shane Robison, visited BusinessWeek recently, we asked him to define cloud computing, one of the hot new terms in tech. He laughed and politely refused. We asked again. He offered some general thoughts, but again avoided a precise definition.

It was an unusual response from a renowned thinker in the technology industry. Yet Robison's reticence shows how difficult it is to get clarity about cloud computing these days. Almost every week, there's a new initiative unveiled using the term. Most recently, Google (GOOG) and Salesforce.com (CRM) announced a joint effort, with Google Chief Executive Eric Schmidt declaring this "the computing cloud age." And as the buzz about clouds has grown, the term is being stretched to cover a whole host of very different activities. Here's a guide to see through the confusion over clouds.

What is cloud computing?

While different people use it to mean different things, the broadest definition refers to any situation in which computing is done in a remote location (out in the clouds), rather than on your desktop or portable device. You tap into that computing power over an Internet connection. "The cloud is a smart, complex, powerful computing system in the sky that people can just plug into," says Web browser pioneer Marc Andreessen. Here's his take on clouds.

What's new about that?

Cloud computing is similar to what the tech industry has been calling "on-demand" or "utility" computing, terms used to describe the ability to tap into computing power on the Web with the same ease as plugging into an electric outlet in your home. But cloud computing is also different from the older concepts in a number of ways. One is scale. Google, Yahoo! (YHOO), Microsoft (MSFT), and Amazon.com (AMZN) have vast data centers full of tens of thousands of server computers, offering computing power of a magnitude never before available. Cloud computing is also more flexible. Clouds can be used not only to perform specific computing tasks, but also to handle wide swaths of the technologies companies need to run their operations. Then there's efficiency: The servers are hooked to each other so they operate like a single large machine, so computing tasks large and small can be performed more quickly and cheaply than ever before. A key aspect of the new cloud data centers is the concept of "multitenancy." Computing tasks being done for different individuals or companies are all handled on the same set of computers. As a result, more of the available computing power is being used at any given time.

What are the most common uses?

For consumers, there are Web services that require immense computing power, including Web search and social networking sites such as Facebook and MySpace (NWS). In addition, many small Web companies can't afford to operate their own data centers, so they use the data centers of Google and Amazon. Google announced a public test of its service, called AppEngine, on Apr. 7.