Cloud computing provides dynamically scalable and virtualized resources as a service over the Internet. Cloud computing customers consume resources as a service and pay only for resources that they use. Customer can avoid hardware, software cost by renting usage from a third-party provider.
Cloud Computing offers following resources as services
software as a service (SaaS): A complete applicaton offered as a service on demand
platform as a service (PaaS): encapsulation of a developement enviroment abstarcation for every phase of software development and testing
infrastructure as a service (IaaS): delivering storage and computing capabilities as services over the network
Virtualization
Virtualization is the encapsulation of phisycal resouces. It deliver specific advantages such as reducing operating cost, space and power, disaster recovery and higer utilization.
