Cloud computing is a recent and popular buzz-word and a precise definition is difficult if not impossible. Simply put, it means people can use and create software and store information without being concerned with where that software and information is stored. Instead of installing software and storing information on their personal computers, they use software on the Internet and rely on those Internet systems to store their information.

Quote by Maggie Fox of Social Media Group: "if you need software on your computer, its not cloud computing. If you need hardware (disk space, computing power, its not cloud computing)"

Related Terms

SaaS. Software as a Service. SaaS is arguably synonymous to cloud computing. The idea is that individuals and corporations don't buy and install software on their own computers, they use software that lives on a server somewhere.

Utility Computing. Computing power as a commodity as ubiquitous and scalable for individuals as electricity. Also arguably synonymous with cloud computing.

Moore's Law. From Wikipedia: "describes a long-term trend in the history of computing hardware. Since the invention of the integrated circuit in 1958, the number of transistors that can be placed inexpensively on an integrated circuit has increased exponentially, doubling approximately every two years."
The key is that hardware-- processing speed and disk space-- has doubled in quality every two years or so. This rapid change has transformed what we can do on computers, and has made cloud computing possible. Brewster Kahle of the Internet Archive chanted for years, "Disk space is free!" What he meant was that we need to realize that the game has changed drastically and many things (e.g., storing the entire history of the web, or someone's personal history in video) is now possible.

Advantages of the Cloud for Ordinary People

Advantages for Organizations and Startups

You can implement a software/website idea without investing in expensive hardware and software (Prior to the cloud, you'd need enough hardware to handle a 'spike' when you first get popular).

Your website can scale and handle the spike in usage that often occurs on the 'viral' Internet. See: http://www.youtube.com/watch?v=CX-lQsrtQks

You can reduce or eliminate your IT department.

Your system can be more secure (arguably). Here's a quote from an InfoWeek article:

"But if larger enterprises can't yet rely on security in the cloud-provided security, smaller companies may actually get better security from the cloud, says Pescatore. One reason is that a cloud provider can invest more in security than any individual small business could, because the cost is applied across hundreds of customers. Another is that as soon as a cloud provider patches a security vulnerability, all its customers are protected immediately, unlike the case for downloadable patches that IT must apply itself."

Disadvantages

Loss of jobs if IT departments go away.

You don't have complete control over your information. What if Google was suppeonaed by the government to hand over your information? What if Google's servers were infiltrated?

The counter arguments goes like this: But does this mean its less secure than if it was on your school's servers? Your desktop?

Free speech. If one or a few companies control all data, this might have long-range effects on free speech. If a more totalitarian government took control of our country, the cloud would make it easier for them to control the flow of ideas. China and their censored search is a good example of how a government can control things.