The underlying concept of cloud computing dates back to 1960s, when John McCarthy opined that "computation may someday be organized as a public utility". Almost all the modern day characteristics of cloud computing (elastic provision, provided as a utility, online, illusion of infinite supply), the comparison to the electricity industry and the use of public, private, government and community forms was thoroughly explored in Douglas Parkhill's, 1966 book, "The Challenge of the Computer Utility".
The actual term "cloud" borrows from telephony in that telecommunications companies, who until the 1990s primarily offered dedicated point-to-point data circuits, began offering Virtual Private Network (VPN) services with comparable quality of service but at a much lower cost. By switching traffic to balance utilization as they saw fit they were able to utilise their overall network bandwidth more effectively. The cloud symbol was used to denote the demarcation point between that which was the responsibility of the provider from that of the user. Cloud computing extends this boundary to cover servers as well as the network infrastructure.
Amazon played a key role in the development of cloud computing by modernizing their data centers after the dot-com bubble, which, like most computer networks, were using as little as 10% of their capacity at any one time just to leave room for occasional spikes. Having found that the new cloud architecture resulted in significant internal efficiency improvements whereby small, fast-moving "two-pizza teams" could add new features faster and easier, 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.
In 2007, Google, IBM, and a number of universities embarked on a large scale cloud computing research project. In early 2008, Eucalyptus became the first open source AWS API compatible platform for deploying private clouds. By mid-2008, Gartner saw an opportunity for cloud computing "to shape the relationship among consumers of IT services, those who use IT services and those who sell them", and observed that "[o]rganisations are switching from company-owned hardware and software assets to per-use service-based models" so that the "projected shift to cloud computing ... will result in dramatic growth in IT products in some areas and significant reductions in other areas."
In March 2010, Microsoft's CEO, Steve Ballmer, made his strongest statement of betting the company's future in the cloud by proclaiming "For the cloud, we're all in" and further stating "About 75 percent of our folks are doing entirely cloud based or entirely cloud inspired, a year from now that will be 90 percent."
Microsoft has also offered details on cloud services for government agencies 
2 months ago