Welcome to the second of our three-part series on cloud computing history.
Last time, we looked at
the origins of the cloud. We learned how virtualisation techniques emerged more than 60 years ago. We saw the development of time-sharing technology, which prefigured the sharing of compute power that's now common in data centres. And we marvelled as ARPANET, the world's first packet-switched WAN, morphed into the modern internet.
In this post, we trace the cloud's journey through the 70s into the 80s and onwards to the dot-com boom of the 90s.
The 1970s: virtualisation goes mainstream (sort of)
The first virtual machines (VMs) were created in the 1960s. But in the following decade, research into virtualisation technologies ramped up significantly.
As a result, the 1970s saw the first publicly available VMs come to market. A notable example is VM/370, a virtual machine operating system introduced by IBM in 1972 for use with its System/370 mainframe computers.
(Bonus fact: IBM also coined the term "hypervisor" to describe VM/370's virtualisation component.)
The disco decade also heralded the first use of the term "client-server", denoting a model where clients access data from a central server over a local area network (LAN).
1989: the world wide web is invented
The 1980s delivered huge technological leaps, but there were few cloud-related breakthroughs. Instead, the tech giants of the day focused on miniaturisation – making computers smaller, faster and, most importantly, cheaper.
This laid the groundwork for the future explosion in internet usage. But the spark that lit the fuse was the invention of the world wide web in 1989.
Before WWW, the internet was a confusing swamp of protocols, used only by enthusiasts and academics (read: reluctant enthusiasts). But with the web – and its accompanying HTTP protocol – came a new dawn of informational organisation.
Now, with hyperlinks and URLs, the internet made sense. And it wouldn't take long before people flocked to make sense of it.
The early 1990s: grid computing is born
Grid computing is often seen as a precursor to cloud computing, although both models are still in use. A grid computing environment uses lots of discrete but interconnected computers to achieve a common goal.
This is similar to, but distinct from, an earlier concept called cluster computing. In cluster environments, computers pool their CPU power to accomplish a single task – effectively working together as a single, super-powerful computer. In grid computing, each node is assigned a specific task and works on that task independently.
Grid computing was developed further as the decade wore on, with volunteer computing – donating unused CPU resources to research projects – debuting in 1996. Today, grid computers are often used for high-intensity computing tasks such as financial modelling and weather forecasting.
1996: the cloud gets its name
As we've seen, non-local computing has existed in some form for many decades. But only fairly recently have we begun calling it "cloud computing".
Many assume that Google coined "the cloud". After all, it was then-Google-CEO Eric Schmidt who
used the term at a 2006 industry conference, sparking an industry-wide trend in cloud technology announcements the following year.
Schmidt's idea of the cloud was more or less in keeping with today's cloud computing paradigm. Speaking of an "emergent new [computing] model", he said "it starts with the premise that the data services and architecture should be on servers. We call it cloud computing – they should be in a 'cloud' somewhere.
"It doesn't matter if you have a PC or a Mac", he added, "you can still get access to the cloud".
But while Google may have popularised the modern cloud, the first use of the term "cloud computing" occurred – as far as we can tell – nearly 10 years earlier.
And it wasn't at a big industry conference or product launch. It was
part of an internal report from Compaq, titled Internet Solutions Division Strategy for Cloud Computing and never meant for public eyes.
Compaq had intended to use "cloud computing" as a marketing term – a catchy way to sell the nascent concept of SaaS (software as a service).
However, the phrase didn't catch on. For a while, anyway…
1999: the first SaaS application
Some sources cite Salesforce as the first SaaS application. The CRM system launched in 1999 and could – unusually for the time – be accessed over the internet.
But was it really the first? That depends on how you define SaaS.
See, as the internet reached peak hype in the mid-1990s, a few tech-minded entrepreneurs spotted an opportunity. They could host specialist business applications online and save businesses the headaches of upgrades, maintenance and data storage.
Thus began the short but noteworthy reign of the ASPs – application service providers.
ASPs functioned similarly to modern SaaS providers, but there are some key differences. To name a few:
- ASPs usually hosted third-party software, while SaaS providers typically develop their own software.
- Users would have to install special client software to access the applications. Many SaaS applications are available as web apps, accessible from any modern browser.
- The multi-tenant architecture of modern SaaS was but a pipe dream. In the ASP model, separate instances of each application had to be maintained for each business.
- SaaS applications are usually self-service, while ASPs had to create and manage user accounts on the behalf of businesses.
Of course, such comparisons are moot nowadays. The popularity of SaaS applications has all but eroded any lingering memories of the ASP model.
As for Salesforce being the first… we'll allow it the accolade. Salesforce may well have been the first company to develop its own SaaS application – and to develop it from the ground up as a SaaS application.
And as the new millennium dawned, many more businesses would launch their own SaaS offerings. At first, SaaS was mostly limited to specialise business applications (another early provider was Concur, a developer of expense management software). However, it wouldn't be long before well-known brands like Microsoft and Apple got on board the SaaS Express.
The rest, as they say, is history…

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