Here's a weird bit of tech history: the cloud industry—worth over half a trillion dollars now—got its name from a doodle.
Back in the 70s and 80s, telecom engineers drawing network diagrams would carefully map out everything they controlled. But the public telephone network? The internet? Too complex to draw, and not their responsibility anyway. So they'd sketch a puffy blob. A cloud. It basically meant "stuff happens here, don't ask me."
How a Doodle Became an Industry
The cloud symbol was never meant to be poetic. No one was thinking about floating, ethereal computing. Engineers just needed a way to say "the network between point A and point B" without drawing the whole thing. So: cloud.
This shorthand stuck around for decades. Then companies started selling computing over the internet, and... we didn't have a better name. "Utility computing" was on the table. "Elastic infrastructure." Neither caught on. The industry defaulted to the diagram symbol everyone already knew.
We named a technological revolution after engineers shrugging at their whiteboards.
Forty Years from Idea to Reality
The concept predates the technology by a long time.
McCarthy's Prediction
John McCarthy—yes, the guy who coined "artificial intelligence"—said this at MIT's centennial celebration:
"Computation may someday be organized as a public utility just as the telephone system is a public utility."
Remember, computers filled rooms back then. This was basically sci-fi.
Parkhill's Book
Douglas Parkhill wrote "The Challenge of the Computer Utility." Reading it today is surreal—he's describing AWS decades before Amazon existed. Metered computing. Scalable resources. Complexity hidden from users.
His analogy: you don't need to understand power plants to use a light switch. Computing should work the same way.
Around this time, J.C.R. Licklider at ARPA was dreaming up an "Intergalactic Computer Network." (Actual name he used.) His work fed directly into ARPANET, which became the internet.
These guys saw the future clearly. They just couldn't build it yet. Bandwidth was measured in kilobits.
The Name Appears
November 14, 1996: a Compaq internal document titled "Internet Solutions Division Strategy for Cloud Computing." This is the first known use of the term.
George Favaloro (marketing) and Sean O'Sullivan (tech) wrote it while strategizing about software subscriptions replacing software purchases. The following year, professor Ramnath Chellappa gave the first academic definition—something about "economic rationale rather than technical limits." Translation: use what you need, not what you bought.
Salesforce
Marc Benioff quit Oracle, rented a one-bedroom apartment in San Francisco, and started Salesforce. Their marketing was blunt: a red circle with "software" crossed out. The "No Software" campaign went straight at Siebel, Oracle, SAP.
CRM through a web browser. No installation. Monthly fee. This was cloud computing, even if nobody called it that yet.
AWS Launches
March 14, 2006. Amazon releases S3. EC2 follows in August.
The origin story is almost embarrassingly practical. Amazon had built huge infrastructure for holiday shopping spikes—Black Friday, Cyber Monday—and it sat mostly idle the rest of the year. Someone asked the obvious question: what if we rented the spare capacity?
AWS now makes more profit than Amazon's retail business. The side project swallowed the company.
What "Cloud Computing" Actually Means
Cut through the marketing speak: you're using someone else's computers over the internet and paying for what you use.
Instead of buying servers, racking them in a data center, and hiring people to keep them alive, you rent from AWS or Google Cloud or Azure.
The industry invented three categories:
IaaS (Infrastructure as a Service): Virtual machines, storage, networking. You get the building blocks. OS, security patches, applications—that's still on you. EC2 is the classic example.
PaaS (Platform as a Service): You write code, they run it. Heroku, Google App Engine. You give up control but skip the headaches.
SaaS (Software as a Service): Finished applications delivered over the web. Gmail. Salesforce. Slack. You're a user, not an operator.
NIST (the standards people) came up with five requirements for something to count as "cloud computing" rather than just "renting a server":
- Spin up resources yourself, no phone calls required
- Access from anywhere with internet
- Multiple customers sharing physical hardware (multi-tenancy)
- Scale up or down fast
- Pay by usage, like electricity
That last one is the real innovation. You could rent servers before AWS existed. But renting by the hour? By the second? Per gigabyte? That was new. No upfront capacity planning. No guessing. Just use it.
Why This Actually Mattered
Pre-cloud, starting a software company required serious money. Servers, networking gear, data center space, someone to maintain it all. Call it $100k minimum for a basic web app. You'd guess your traffic, buy hardware, and hope you got it right.
Cloud turned that into maybe $100/month. Maybe $1,000 if you're doing something fancy.
The Instagram math is instructive: 13 employees when Facebook bought them for $1 billion in 2012. Thirty million users running on AWS. No server room. No hardware team. Just engineers and a credit card.
For bigger companies, cloud killed capacity planning. Auto-scaling handles traffic spikes at 3am. Traffic drops? Scale down. You only pay for what you actually used.
There's a catch, though. Cloud was supposed to reduce vendor lock-in—your code runs on VMs, move it anywhere. In practice? Good luck migrating off DynamoDB or Cloud Spanner. Managed services create new dependencies. The lock-in shifted, it didn't disappear.
The Name Made Sense All Along
The cloud symbol meant "not your problem" in those old network diagrams. And that's still the pitch. Don't think about the servers. Don't think about cooling systems or network topology or redundancy. Just pay for outcomes.
AWS, Azure, and Google Cloud run most of what you use online. The default way to build software now is on somebody else's hardware.
A diagram shorthand from the 1970s became the name of the industry. Turns out it was the right name.