"Cloud" is used as a metaphor for the Internet, based on the cloud drawing used in the past to represent the telephone network, and later to depict the Internet in computer network diagrams as an abstraction of the underlying infrastructure it represents.
Cloud computing is a natural evolution of the widespread adoption of virtualization, service-oriented architecture, autonomic and utility computing. Details are abstracted from end-users, who no longer have need for expertise in, or control over, the technology infrastructure "in the cloud" that supports them.
The underlying concept of cloud computing dates back to the 1960s, when John McCarthy opined that "computation may someday be organized as a public utility." Almost all the modern-day characteristics of cloud computing (elastic provision, provided as a utility, online, illusion of infinite supply), the comparison to the electricity industry and the use of public, private, government and community forms, were thoroughly explored in Douglas Parkhill's 1966 book, The Challenge of the Computer Utility.
The actual term "cloud" borrows from telephony in that telecommunications companies, who until the 1990s primarily offered dedicated point-to-point data circuits, began offering Virtual Private Network (VPN) services with comparable quality of service but at a much lower cost. By switching traffic to balance utilization as they saw fit, they were able to utilize their overall network bandwidth more effectively. The cloud symbol was used to denote the demarcation point between that which was the responsibility of the provider, and that which was the responsibility of the user. Cloud computing extends this boundary to cover servers as well as the network infrastructure. The first scholarly use of the term “cloud computing” was in a 1997 lecture by Ramnath Chellappa.
After the dot-com bubble, Amazon played a key role in the development of cloud computing by modernizing their data centers, which, like most computer networks, were using as little as 10% of their capacity at any one time, just to leave room for occasional spikes. Having found that the new cloud architecture resulted in significant internal efficiency improvements whereby small, fast-moving "two-pizza teams" could add new features faster and more easily, Amazon initiated a new product development effort to provide cloud computing to external customers, and launched Amazon Web Service (AWS) on a utility computing basis in 2006. The first exposure of the term Cloud Computing to public media is by GoogleEx CEO Eric Schmidt at SES San Jose 2006. It was reported in 2011 that Amazon has thousands of corporate customers, from large ones like Pfizer and Netflix to start-ups, Amongst them also include many corporations that live on Amazon's web services, including Foursquare, a location-based social networking site; Quora, a question-and-answer service; Reddit, a site for news-sharing and BigDoor, a maker of game tools for Web publishers.
In 2007, Google, IBM and a number of universities embarked on a large-scale cloud computing research project. In early 2008, Eucalyptus became the first open-source, AWS API-compatible platform for deploying private clouds. In early 2008, OpenNebula, enhanced in the RESERVOIR European Commission-funded project, became the first open-source software for deploying private and hybrid clouds, and for the federation of clouds. In the same year, efforts were focused on providing QoS guarantees (as required by real-time interactive applications) to cloud-based infrastructures, in the framework of the IRMOS European Commission-funded project. By mid-2008, Gartner saw an opportunity for cloud computing "to shape the relationship among consumers of IT services, those who use IT services and those who sell them" and observed that "rganisations are switching from company-owned hardware and software assets to per-use service-based models" so that the "projected shift to cloud computing will result in dramatic growth in IT products in some areas and significant reductions in other areas.
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