Introduction to cloud computing

As per me, it is a marketing term used to describe the applications used on the internet.
With my little research, I found three definitions which give more clarity and have largely been agreed upon - and are based on functionality. The distinction allows you to make real choices to how to save your company money.

Each represents only one part of the growing cloud environment, not the Cloud as a whole.

Software as a Service (SaaS) represents software which is available to use already. It can be configured, but it is not necessary to hire developers to create it. The solutions of Customer Relationship Management, Salesforce Automation, Marketing Automation, Customer Service and Support largely fall into this category.

Eg. google docs, Microsoft Office Web Apps

Platform as a Service (PaaS) provides environment and tools for creating new online custom applications on the base platform from which the SaaS applications have been written. Using this environment, saves considerable time and effort in development.

Eg. force.com from Salesforce, Microsoft Windows Azure, Google App Engine

Infrastructure as a Service (IaaS) is available to companies who have already implemented their web based applications and do not wish to host them locally. This option is chosen when the cost to host your own solutions is more than the cost of the service costs. It is a smart option for smaller organizations who cannot afford the resources required for securing your own internal clouds. It allows existing applications to be run on a cloud supplier’s hardware.
Hybrid models do exist. You can have your own private cloud, and also lease remotely hosted infrastructure, platform space or full software solutions externally from your environment.

Eg. Amazon EC2, Rackspace, gogrid
So, the next time you see a cloud computing advertisement, ask yourself what service they are offering: SaaS, PaaS, or IaaS. Then ask yourself which environment they are offering the solution in: Java, .NET, or Apex.

While "infrastructure as a service" (where companies rent compute time and storage, such as with Amazon EC2) and "software as a service" (applications such as Salesforce's Sales Cloud and Concur's travel and expense management tool) are fairly mature, the general cloud platforms are still evolving.
As such, there's an enormous potential market for whoever get its right. That's why Salesforce --and its competitors--are putting so much emphasis on this. I expect we'll see a lot more evolution - and a lot more consolidation - in the year ahead.