Cloud computing may seem like a relatively new term, but it builds upon many years of distributed technologies.
Cloud computing found its origin in the success of server virtualisation and the potential to run IT more efficiently through server consolidation. Visionaries came up with idea to bring virtualisation to a next level by implementing early storage and network virtualisation techniques that could be applied systematically across all the machines in a single data center.
Add to this self-provisioning and auto scaling, and cloud computing was born. At the time it was called utility computing, however, and only Amazon – an online bookstore – was using it as a way to manage their own internal computing resources. Amazon saw a growth in popularity of its EC2 (compute) and S3 (storage) services. The Amazon API was being used by thousands of developers and many more customers to deploy and run infrastructure in the cloud.
The actual term "cloud" borrows from telephony. Telecommunications companies, who until the 1990s primarily offered point-to-point data circuits, began offering Virtual Private Network (VPN) services with a comparable quality of service but at a much lower cost. By switching traffic to balance load as they saw fit, they were able to use their overall network bandwidth more effectively. They used the cloud symbol to mark the point between the infrastructure that was the responsibility of the provider, and where the user took over. Cloud computing extends this boundary to cover servers as well as the network infrastructure. The first scholarly use of the term “cloud computing” was in a 1997 lecture by Ramnath Chellappa .
Amazon played a key role in the development of cloud computing by updating and modernising their data centres, which at the time, like most computer networks, were using only 10% of their capacity at any one time. The new cloud architecture resulted in significant improvements in internal efficiency since small, fast-moving teams could add new features and applications more quickly and easily. Amazon initiated a new product development effort to provide cloud computing to external customers, and launched Amazon Web Service (AWS) on a utility computing basis in 2006. The Cloud Computing term was first exposed to the public media by GoogleEx CEO Eric Schmidt at SES San Jose 2006.
 Intermediaries in Cloud-Computing: A New Computing Paradigm Ramnath Chellapp. Presented at the INFORMS meeting in Dallas in 1997