What is the Cloud (Cloud Computing): A Beginner's Guide

17-02-2025 / Trends & News / 9 mins.

YouTube. Netflix. Uber. Spotify. TikTok. Whatever you like. You sign up and get your own account. Once you set it up the way you want, you can access it from any internet-connected device, including smartphones and smartwatches.

If your device breaks, gets lost, or you switch to a new one, you can still access your account — along with its settings and information — from another device without having to set everything up from scratch. It's as if your account information is securely stored on a hard drive somewhere outside your physical device.

Without the cloud, none of this would exist. In fact, you wouldn't have Google Drive or Dropbox to store those unfinished novels or songs you're hoping to release someday. And that's just one example.

What is the cloud in simple terms?

The cloud is a worldwide network of servers and supporting infrastructure that operates over the internet, rather than locally on a device.

Servers are highly powerful physical or virtual computers that form the core of a network. They are designed to perform specific functions, such as hosting application software, running databases, or providing online storage to multiple users at the same time.

All you need to do is connect your device to the internet and log in to the service or application you want to use. You can access it through a mobile app or a web browser like Chrome.

Why is it called "the cloud"?

The cloud combines three key aspects of computing that multiple users can share simultaneously: online storage, databases, and processing power (compute).

The cloud isn't something physical, but the servers that make it up are, and they are located in data centers distributed around the world. Unlike personal computers, these data centers are owned by cloud computing specialists known as Cloud Service Providers (CSPs).

CSPs design, build, and maintain the technology, services, and infrastructure their data centers require to meet the needs of their customers' applications.

Renting this infrastructure for your cloud computing needs is a smart way to save money and time, whether you're an individual or a business. We'll explain why shortly.

How did the cloud begin?

The technology underpinning cloud computing has its roots in the 1960s, when IBM virtualized operating systems, allowing users to share the same resource simultaneously.

However, the cloud as we know it today was born in the early 2000s, when engineers at Amazon — then an emerging e-commerce company — sought to build a highly scalable platform for their growing needs.

To achieve this, they had to devise new ways to expand the online service without it collapsing. The problem: developing new features required engineers to code them from scratch every single time.

(Audio clips from the podcast "Cloud Atlas: How The Cloud Reshaped Human Life" are included below. Find the full podcast here.)

On top of that, software engineers had to spend a great deal of money and time purchasing equipment and assembling it. They also needed a wide range of skills and a sizable team to prepare a local or nearby data center for their upcoming projects.

Michael Skok faced this exact same problem when he was CEO of AlphaBlocks, a software company he founded in 1996.

Now, imagine if engineers could simply rent ready-made capabilities whenever they needed them, instead of building everything from scratch.

Wouldn't it be great to get online storage, databases, and compute power without having to build the infrastructure from the ground up every time? So much time and money would be saved.

Amazon CEO Andy Jassy said this was exactly what his team came up with internally.

Amazon also needed speed and scalability, so it created the Amazon Web Services (AWS) platform, starting with Simple Storage Service (Amazon S3).

Today, AWS offers more than 200 cloud services, including Amazon S3 (storage), Amazon RDS (databases), and Amazon EC2 (compute). Since then, other companies such as Microsoft Azure, Alibaba Cloud, and Google Cloud Platform (GCP) have emerged as prominent competitors.

Why use the cloud?

Businesses use the cloud for a variety of reasons:

Low capital investment. Instead of buying, installing, and maintaining physical servers in data centers, your company can access technology services — such as compute (CPU, RAM, and networking), storage, and databases — on demand through a cloud provider like AWS.
Cloud computing. You can perform computing tasks from anywhere, at any time, and on any internet-connected device. Switching devices or locations won't affect your ability to pick up exactly where you left off.
On-demand pricing. You only pay for the resources you use (compute, storage, and databases), with no upfront payments or long-term commitments.
Faster time to market. By renting cloud infrastructure on demand, you can launch and run projects faster, reducing the time between idea and final product.
Business transition agility. Changing or adapting a business traditionally meant selling old equipment (at depreciated prices), buying new infrastructure components, and starting over. With the cloud, you can adjust resources without major costs or complicated processes.
Real-time collaboration. The cloud allows you to work simultaneously with colleagues or entire teams, even if they are hundreds of miles away.
Remote work. If you have internet access, you can reach your files and databases from anywhere.
High availability and continuous service. Cloud servers are always online, and you can use them whenever you need them.
Backup and recovery services. Your data is copied across multiple data centers around the world, ensuring its protection in the event of a disaster.
Near-infinite scalability. You can scale resources up or down as needed to meet your application requirements.

Managed services. The cloud provider handles building, operating, and updating the infrastructure, allowing you to focus on improving your product or service.

Cloud delivery models: What are the four cloud computing service models?

There are four ways to deliver cloud computing infrastructure:

Infrastructure as a Service (IaaS): In this model, you rent servers, networking, and storage capacity from a cloud provider under a pay-as-you-go model, such as AWS, Azure, or Alibaba. You can scale these resources up or down as needed.

Example: OpenStack, DigitalOcean, and Google Compute Engine.

Platform as a Service (PaaS): Here, the cloud provider delivers everything over the internet: servers, networking, storage, operating systems, middleware, and databases.

Example: Heroku and Microsoft Azure.

Software as a Service (SaaS): SaaS applications are cloud-based software. There's no need to install them on your devices; you simply access them online through a subscription.

Example: Gmail, Salesforce, HubSpot, and Slack.

Serverless Computing (Serverless Computing / FaaS): This model allows you to delegate server management to the cloud provider. You don't worry about infrastructure — you only pay for the time your functions are running.

Example: AWS Lambda, Google Cloud Functions, and Azure Functions.

Cloud deployment types: What are the four ways to deploy applications in the cloud?

There are four ways to deploy applications in the cloud:

Public Cloud: The cloud service provider offers resources shared among multiple organizations to reduce costs.
Private Cloud: An infrastructure dedicated exclusively to one organization, without sharing resources with other companies.
Hybrid Cloud: Combines public and private clouds, allowing different workloads to be managed across each.
Multi-Cloud: Uses resources from multiple cloud providers to avoid dependency on a single vendor and access a wider variety of services.

What are the leading cloud service providers?

The number of cloud service providers has grown exponentially in recent years, from large companies offering enterprise-level solutions to more specialized providers focused on startups and specific industries.

Amazon Web Services (AWS)

Amazon Web Services dominates the cloud services market with a 31% share. It offers more than 200 services for a wide range of purposes, with the main ones being Amazon Elastic Compute Cloud (EC2) for compute, Amazon Relational Database Service (RDS) for databases, and Amazon Simple Storage Service (S3) for cloud storage.

Although AWS is primarily a public cloud, it also supports use in on-premises, edge, private, hybrid, and multi-cloud environments.

Microsoft Azure

With a 25% market share, Azure is Microsoft's answer to Amazon Web Services. In addition to private and on-premises deployments, it supports hybrid/multi-cloud resources and edge computing.

Google Cloud Platform

Google's cloud platform accounts for 13% of the market, with a 35% year-over-year revenue increase. Known for its ease of use and its big data and machine learning capabilities, it is the third-largest provider. Additionally, Google pioneered Kubernetes, the highly scalable, self-healing open-source container management platform, which it now offers through Google Kubernetes Engine (GKE).

Alibaba Cloud

It is the largest cloud service provider in the Asia-Pacific region and the fourth largest globally, with a 4% market share. It also offers DDoS attack protection, big data processing, and more. Its competitive advantage lies in its Content Delivery Network (CDN).

Oracle Cloud

It offers the same cloud services as the others, though it is geared toward enterprises. Oracle claims to offer 2x better price-performance in compute compared to AWS. Oracle Cloud Infrastructure is optimized for running Oracle-related workloads, just as Azure is for Microsoft workloads.

Other notable cloud service providers include IBM Cloud, DigitalOcean Cloud, Huawei Cloud, Dell Technologies, and Tencent Cloud.