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Cloud computing is the the use of various services, such as software development platforms, servers, storage and software, over the internet, often referred to as the "cloud."

In general, there are three cloud computing characteristics that are common among all cloud-computing vendors:

1. The back-end of the application (especially hardware) is completely managed by a cloud vendor.
2. A user only pays for services used (memory, processing time and bandwidth, etc.).
3. Services are scalable

Many cloud computing advancements are closely related to virtualization. The ability to pay on demand and scale quickly is largely a result of cloud computing vendors being able to pool resources that may be divided among multiple clients.

It is common to categorize cloud computing services as infrastructure as a service (IaaS), platform as a service (PaaS) or software as a service (SaaS).

Some consider cloud computing an overused buzzword that has been blown out of proportion by marketing departments at large software firms. A common argument from critics is that cloud computing cannot succeed because it means that organizations must lose control of their data, such as an email provider that stores data in multiple locations around the world. A large regulated company, like a bank, might be required to store data in the United States. While this is not an insurmountable issue, it demonstrates the type of issue that some companies may have with cloud computing.

Cloud computing proponents point to it being a new paradigm in software development, where smaller organizations have access to processing power, storage and business processes that were once only available to large enterprises.

The name cloud computing comes from the traditional usage of the cloud to represent the internet – or a wide area network (WAN) – in network diagrams or flowcharts.