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At a developer conference this week, Microsoft announced it would be releasing a cloud computing service alongside its forthcoming operating system, Windows 7. Cloud computing is a broad term that describes software and services made available on the Internet instead of on local computers and servers.

Examples of current cloud applications are the various Google Apps like Google Docs, where word processor and spreadsheet applications are not installed on a local computer, but rather exist as a service accessed online. One of the benefits of cloud applications is that, because they exist online as opposed to on a single computer or network, they can be accessed from any computer. Also, because the services exist across a number of servers, there is great reliability, as well as the capability to handle spikes in online traffic.

The Windows announcement is a clear response to companies like Google and Amazon.com, an early pioneer in commercial cloud services. While Microsoft certainly has the resources to commit data centers to these services, it remains to be seen how they will fare in this newest stage of computing.