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Cloud computing, the long-held dream of computing as a utility, has the potential to transform a large part of the IT industry, making software even more attractive as a service and shaping the way IT hardware is designed and purchased. Developers with innovative ideas for new Internet services no longer require the large capital outlays in hardware to deploy their service or the human expense to operate it. They need not be concerned about overprovisioning for a service whose popularity does not meet their predictions, thus wasting costly resources, or underprovisioning for one that becomes wildly popular, thus missing potential customers and revenue. Moreover, companies with large batch-oriented tasks can get results as quickly as their programs can scale, since using 1,000 servers for one hour costs no more than using one server for 1,000 hours. This elasticity of resources, without paying a premium for large scale, is unprecedented in the history of IT.

As a result, cloud computing is a popular topic for blogging and white papers and has been featured in the title of workshops, conferences, and even magazines. Nevertheless, confusion remains about exactly what it is and when it’s useful, causing Oracle’s CEO Larry Ellison to vent his frustration: “The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do…. I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads.”

Our goal in this article is to reduce that confusion by clarifying terms, providing simple figures to quantify comparisons between of cloud and conventional computing, and identifying the top technical and non-technical obstacles and opportunities of cloud computing. (Armbrust et al4 is a more detailed version of this article.)