This article first appeared in the Verizon Wireless Consumer Newsletter.

by: Paul O’Reilly

There has been a lot of talk in the media recently about “cloud computing” and how it is revolutionizing the way we communicate and how we interact through the Web. Driving forces behind the growth of cloud computing include both consumer applications and enterprise needs. But what is cloud computing and how is it going to impact our daily lives?

As far as it relates to consumer services, cloud computing is a general term for anything that involves delivering hosted services over the Internet. By a hosted service, I mean a service that is fully managed by the provider; the consumer needs nothing more than a personal computer and an Internet connection to be able to access the service and take advantage of its capabilities. The name cloud computing was inspired by the cloud that is often used to represent the Internet in flow charts and diagrams.

An example of consumer use of the cloud? Gmail. When we log on to a Gmail account, we are taking advantage of an e-mail application that is hosted by Google. All our incoming and archived mail is stored on Google’s servers, ready to be delivered to our computer screen whenever we want it. We don’t have to worry about upgrades or storage issues; all this is taken care of by Google with minimal impact on our own computer’s resources or capacity.

Contrast this with an application like Microsoft Outlook, where we download software and manage e-mail on our own computer. Although incoming and outgoing e-mail is temporarily stored on the servers of our Internet provider, it is ultimately downloaded to our own computer when we ask for it and is stored locally on that computer until we decide to permanently delete it. Similarly, we are responsible for software upgrades and making sure the data is backed-up.

Other examples of everyday consumer cloud applications include Facebook, Twitter, Netflix, and online banking. In each case, the application programming and data is stored elsewhere and we access that programming and data only when we need it.

These are all consumer applications. When it comes to cloud computing on the enterprise side, the focus is usually on three main areas: software services, platform services, and infrastructure services.

As small companies grow, they are often faced with important decisions on whether to keep their IT services in-house or to outsource those services. For example, a rapidly growing online vendor can choose to build its own point-of-sale system or outsource that function to another company like Amazon that already has such a system. If it chooses to outsource, then its transactions are handled through the cloud – i.e. over the Internet to a third-party host.

As well as being fully-managed by the provider, the other distinguishing characteristic of cloud computing is that it is an on-demand service – the user can have as much or as little of the service as they want. This last point, plus improved bandwidth and response time, is really what is driving the current interest in cloud computing, particularly in a cost-cutting economy.

The main arguments against cloud computing are access and security. If your software and data files are stored locally, then they are always available and not subject to third-party “outages.” Similarly, you can take steps to secure data that’s held locally and not have to rely on others to take those steps for you.

As far as consumers are concerned, most of us are making a gradual transition to cloud computing without even realizing it. And the rapid growth of mobile platforms and super-fast 4G networks will only accelerate that transition.

As many observers point out, we have all been computing in the clouds for some time now and that’s a trend that is sure to continue.