At some point in the future we’ll all be working in and with “the cloud.”

The cloud is (or will be) a cluster of computers that potentially contain all knowledge. According to Bill Gates, at week’s Consumer Electronics Show (CES), the cloud is where he’s betting Microsoft’s future, as is Google, IBM and others.

In the Internet Cloud or cloud computing, information is moved from individual computers to “a small number of vast computing ‘clouds’,” which would provide processing economies as well as energy savings. Even when an individual computer crashes, says the Financial Times, the cloud would reform and keep performing. “The sum of human knowledge would no longer be locked away on isolated hard drives, but accessible from anywhere, and widely shared..”

Blogger Alex Barnett has put it together nicely: “The Internet cloud [is] where the distributed and programmable network of services across the globe will serve all the data, resources and functionality we will ever use.”

The term Cloud Computing is merely the latest “faddish phrase” adds the FT. “It’s the latest incarnation of a vision that has been making the rounds for years. On-demand computing, utility computing, grid computing, software-as-a-service, ‘thin’ clients – these are all flavours of the same idea, as the locus of data storage and computation shifts to ever-bigger clusters of centrally managed machines.

“The arrival of the cloud is a great thing,” Gates told Reuters just prior to the CES. “We have a lot of software people, including competitors, taking advantage of that. We are extending the Windows platform into that area. So it is the new frontier and it will be the frontier that companies will prove themselves out on. That’s where all of our investments are. ( Bill Gates Unplugged, Daisuke Wakabayashi, Reuters, January 7, 2007) Microsoft CEO and General Manager Steve Ballmar gave the cloud a passionate profile last year in his talk at the MS Partners Conference: http://www-03.ibm.com/press/us/en/pressrelease/22613.wss

Gates talked about competing with Google or Salesforce.com in “the cloud of the Internet” where instead of being software on machines, they run on the Internet. IBM has recently come up with “Blue Cloud,” which it will offer this year. In addition to the preceding, Amazon and Yahoo are also offering cloud computing. In contrast with IBM though, these are application based.

For those of us operating below the clouds, in what I like to call the real world, this is something to watch carefully. Remember how the fax sneaked up on us, and one day every company had one?