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Cloud computing is the recent rising star in web or applications hosting industry. You may have been wondering what cloud computing actually means and how it could help your Internet business.

In a nutshell, Cloud computing is actually by means of using many instances distributed across many data centers throughout the world to host your web applications. In other words, Cloud computing also means for websites or web applications that is likely to receive spike of traffic. For example, if your website or blog always gets spike of traffic e.g one of your web or blog posts got submitted to Digg.com and getting a traffic spike, such as more than 10,000 visitors to visit your web page in an hour or a few hours’ time. So you can use Cloud computing to increase instances to share the load of the high traffic so it won’t crash your web server. Increase instances also means increasing the cost you need over a period of time. But you can reduce the cost back to normal when the traffic subsides.

So Cloud computing also provides you many web server instances to run your web applications across many data centers throughout the world. (E.g 5 web instances runs across in 5 different data centers throughout the world) And it also has many database server instances that store your data and located at many different data centers throughout the world. And the applications pull data from all these database instances.

How Cloud Computing sells?

You buy how many instances you need for your web application or web site. And the service provider normally charges you in terms of cents per hour and the price per hour also depends on the storage and memory size you choose. When your web applications or website get huge traffic (e.g digg effect), you can easily add more instances to share or withstand the load, so your website will NOT crash. When the traffic subsides, reduce the instances you have, so you will then pay a lower total cost per hour. Check out how Rackspacecloud sells their cloud computing service.

On the other hand, web hosting provides you only one instance for the web application and one instance for the database server for your website in one data center of the service provider. And of course, web hosting can be categorized into dedicated web hosting, VPS web hosting and shared web hosting.

For web site or application that always gets spike of traffic e.g. digg effect, you’ll need to consider a dedicated hosting in order to be sufficient to withstand the spikes of traffic. In a dedicated hosting, your single instance of web server is allowed to use all the resources of the server hardware (e.g memory and hard disk drive). But dedicated hosting is normally costly which costs you at least $200 USD per month for an entry level server.

If your website will occasionally get spikes of huge traffic, an entry-level dedicated hosting server will not be sufficient to withstand the traffic. If you go for higher-end server, the cost per month will easily shoot up. But you get only moderate traffic most of the time but only huge traffic occasionally, so it is not a wise choice to use a high-end dedicated web host that may eat up more than 70% of your revenue. I’ll provide a more prominent example by looking into advertisement revenue and comparing the cost effectiveness between Cloud computing and a dedicated web host. Here is the article in more technical explanation about the difference between Cloud computing and web hosting.