The Basic types of Cloud Computing Services
The most widely known and widely used form of Cloud Computing, SaaS provides all the functions of a sophisticated traditional application, but through a Web browser, not a locally-installed application. SaaS eliminates worries about application servers, storage, application development and related updates, common concerns of IT. Highest-profile examples are Salesforce.com, Google's Gmail and Apps, instant messaging from AOL, Yahoo and Google, and VoIP from Vonage and Skype.
The consumer uses a hosted environment for their own applications. The consumer controls the applications that run in the environment (and possibly has some control over the hosting environment), but does not control the operating system, hardware or network infrastructure on which they are running. The platform is typically an application framework.
The consumer uses “fundamental computing resources” such as grids or clusters or virtualized servers, networks, storage and system software designed to augment or replace the functions of an entire data center. The highest-profile example is Amazon's Elastic Compute Cloud [EC2] and Simple Storage Service, but IBM and other traditional IT vendors are also offering services, as are telecom providers (e.g. Verizon).