Cloud computing is about hardware-based services (involving computing, network and storage capacities), where:
- Services are provided on-demand; customers can pay for them as they go, without the need to invest into a datacenter.
- Hardware management is abstracted from the customers.
- Infrastructure capacities are elastic and can easily scale up and down.
Cloud computing providers offer their services according to three fundamental models:
- Infrastructure as a service (IaaS).
- Platform as a service (PaaS),
- Software as a service (SaaS)
IaaS is the most basic and each higher model abstracts from the details of the lower models.
See more on Wikipedia: http://en.wikipedia.org/wiki/Cloud_computing