The author Nicholas Carr of "What does it matter "fame wrote a book The Big Switch: Rewiring the World, from Edison to Google" to explain it. Here is a review of his book:
An eye-opening look at the new computer revolution and the coming transformation of our economy, society, and culture. A hundred years ago, companies stopped producing their own power with steam engines and generators and plugged into the newly built electric grid. The cheap power pumped out by electric utilities not only changed how businesses operated but also brought the modern world into existence. Today a similar revolution is under way. Companies are dismantling their private computer systems and tapping into rich services delivered over the Internet. This time it's computing that's turning into a utility. The shift is already remaking the computer industry, bringing new competitors like Google to the fore and threatening traditional stalwarts like Microsoft and Dell. But the effects will reach much further. Cheap computing will ultimately change society as profoundly as cheap electricity did. In this lucid and compelling book, Nicholas Carr weaves together history, economics, and technology to explain why computing is changing--and what it means for all of us.This is a major shift in the mode of computing. The applications such as Google doc, Zoho writer are part of this shift in computing. It offers many benefits but requires a fast continued connection to the Internet. The Google app engine and Amazon EC2 computing services provide services that are classified as cloud computing. This development will also affect the business Internet service hosting and providers.
Here is a video from Web 2.0 expo that shows many participants of the expo explaining their view of Cloud Computing:
Cloud computing, once it becomes utility like electricity will make cost of computing extremely inexpensive and affordable.