The term "cloud computing" isn't terribly clear. But it's better than some acronym. (In fact, there is an acronym--SaaS, or software as a service. See, isn't cloud computing better?)
Cloud, as used by geeks, refers to the Internet. So, people computing in the cloud are running software on somebody else's computers. They access those computers via the Internet. The computers could be next door or overseas.
When they do that, they don't have to install the software. They don't have to update it. They don't have to upgrade whenever a new version appears. They don't need more powerful computers to run new versions.
The guys on the other end take care of all that. Does that save the user loads of money? Probably not. These services are not cheap, especially for business. But they certainly can reduce aggravation. Not having to futz with software means firms can focus on business.
This is a growing trend. Companies that run their own programs put a fortune into computer equipment. More money is spent on the people who run them. Neither the people nor the computers, in most cases, produce revenue. They're a support service.
There are many other services--for instance, janitorial, public relations and security. They are all costs. Companies are in business to make money. One way they make money is by outsourcing services. And one cost reduction might be software.
There's a downside to this. Outsourced service isn't always first rate. Sometimes, dealing with people hundreds or thousands of miles away isn't worthwhile. This is actually a big fly in the ointment.
Let me give you a couple examples from my experience. My salespeople use customer relationship management (CRM) software. These tend to be complicated programs. Rather than install and maintain software, we use Salesforce.com. We have had no problems with it. We don't have to worry about security, updates or upgrades. Salesforce takes care of that. That situation has worked out well.
And here's one that didn't work out: Years ago, a hosting company ran my Web site. It also handled my e-mail. I had numerous little problems with that. Eventually, I brought all of that in-house. Running all that stuff is expensive. And it took a long time to find people who could run it properly.
My Web site and e-mail are absolutely critical. I've got first-rate people now. I know they're on top of the computer system. So, I sleep better with it in-house.
You are using cloud computing now. When you do an Internet search, you are using Google's computers. Or, Yahoo!'s, or Microsoft's. The search software is not on your computer.
There are many photo-editing programs, both free and paid. Just check my site . But you can also do that in the cloud. Here are five free ones. There are many others.
Google also has an office package online--Google Docs. It includes a word processor, spreadsheet and presentation program. Is it less complete than Microsoft Office? Oh, yes. But it's free, and Microsoft Office costs hundreds of dollars.
Furthermore, Microsoft Office has regular security problems. If you use Google, that shouldn't be your concern. Google should take care of those issues.
Some security experts worry about the security of cloud computing. Companies that host these Internet systems insist that they're safe. Are they? How can you know? I'm sure some companies will avoid cloud computing for just that reason.
There's also the matter of the Internet. Will it always be up and running? That is rarely a problem. But it's not something you can control.
Whatever the downside, the world is moving toward cloud computing. Most people don't want to bother with software. As they become aware of the cloud, they will move toward it. But, as your question illustrates, advocates don't make it terribly clear.
Anyway, that's a long-winded answer to your question. Cloud computing could have a more illustrative name. But it's better than SaaS!