What is cloud computing? There is an amusing video on YouTube.com that tries to answer that very question.

The video’s author, an employee of a cloud-computing company called Joyent Inc., asked that question to several top tech editors and CEOs at the Web 2.0 Expo last May and pieced together their responses in a short, comical video.

One interviewee quipped that cloud computing is when you’re using your laptop in an airplane at 40,000 feet. The amusing, and rather telling, aspect of the video is that all the interview subjects said something different.

It seems cloud computing is still an abstraction. But the term itself isn’t new. Anyone who has ever seen a network diagram has probably seen a cloud with arrows pointing to and from it. The cloud represents the network–either a local intranet, or the internet at large–and all the resources available on it. Instead of having software that is stored and run on an individual PC, the user taps into this “cloud” for his or her computing needs.

These days, cloud computing relates to the way IT professionals design, build, deploy, and run applications that operate in a virtualized environment.

“IT as a service…is what cloud computing is all about,” said Hagen Wenzek, a senior strategist at IBM.

In the same way a utility company delivers electricity, natural gas, or water–you sign up, then don’t have to think about it any more–cloud computing delivers IT services to the end user. Advocates of this service model say it’s simpler, faster, and cheaper for organizations–and the experience for the end user is also superior.

Concepts such as on-demand resources, utility computing, virtualization, Software as a Service (SaaS), and Desktop as a Service are integral parts of cloud computing.

“All of these bits and pieces are now finding their way into a more comprehensive story that explains how IT is being delivered and consumed as a service,” Wenzek said.

Characteristically, cloud computing is efficient, automated, and delivers standardized resources–all of which can result in significant cost savings. Several U.S. colleges, universities, and K-12 school districts are already reaping the benefits of switching to a cloud-computing model.

The current economic crisis in the United States and worldwide is pushing businesses and institutions to adopt this new way of running technology. In the private sector, spending on IT cloud services will grow almost threefold, reaching $42 billion by 2012, according to research firm IDC.

“The cloud model offers a much cheaper way for businesses to acquire and use IT,” said Frank Gens, senior vice president and chief analyst at IDC, in a statement. “In an economic downturn, the appeal of that cost advantage will be greatly magnified.”

The investment in technology infrastructure since the turn of the century is also driving the trend toward cloud computing: As school and business networks have become faster and more robust, the capacity to deliver software and IT services through these networks to users on demand has increased.

Moore’s Law has borne out for so long that we’ve moved into an age of digital abundance, where the cost of technology devices for end users is fairly low, said Michael King, IBM’s vice president of global education industry.

That fact has shifted IT managers’ focus from the initial cost of purchasing technology to the total cost of ownership (TCO) for operating and maintaining the technology, King said. What’s important now to schools is, how much electricity will it consume? How many maintenance technicians will be needed?

“It’s not the technology itself any longer, it’s the stuff that goes around the technology [that is most important]–and I think that’s an economic driver toward cloud computing,” King said. “Cloud computing is ultimately going to enable a significant transformation of education to increase quality, increase access to educational resources, and at the same time lower costs. It’s a very fundamental shift, on the order of the shift toward the PC computing model a couple of decades ago.”

How it works

Cloud computing takes the complexity off the desktop–the software, operating system, and processing power–and moves it into the cloud, which is a central location.