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I don't understand cloud, the CPU is limited, Memory is also limited, where is the scalability? Isn't it just the same like VPS with more expensive cost for bandwidth?

So what scaling advantage is offered by cloud computing?

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Memory and CPU are limited on anything, whether cloud or local. Sure you can keep buying more boxes for your local server room but sooner or later you've either filled the room, run out of power or are causing the air conditioning to strain at the edges... In that sense the only thing 'the cloud' does differently with scalability limits is that it causes you to think of scalability from the start. –  RobM Mar 4 '11 at 20:29

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It's called horizontal scalability (or, scale out). You don't add more resources to your system (vertical scalability), you add more machines to your system, and load balance it.

The advantage is being 'elastic', that is, when you get hit by high traffic you automatically deploy more machines to handle the load, and in times where the traffic is small you remove machines from it. So you end having lower cost on the end. That's why cloud resources are billed differently (you pay what you use, not what you 'own').

This is a great talk from the Lead Architect on Ebay talking about cloud computing as a whole and its impacts. It's big, but it's GOLD to understand what's going on :)

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Which is why databases have to be built differently. –  user3914 Mar 4 '11 at 18:09
    
Yep. Using techniques like database sharding. And that's why NOSQL databases are so in vogue now. –  coredump Mar 4 '11 at 18:12

Cloud is that the limit you are talking about can be easily increased. If you are not cloud in order to increase limits you would need to do a LOT of work.

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