Five things you need to know about 'the cloud'

Menacing as this hazy tech term may sound, the cloud is actually a regular part of daily digital life. In fact, gadget analysts expect this metaphorical cloud to envelop more of the world in coming years.

5. What's next?

REUTERS/Gus Ruelas
People preview video games at the OnLive booth at the Electronic Entertainment Expo (E3) in Los Angeles, California June 15, 2010. OnLive announced on Tuesday the initial lineup of games and new pricing plan ahead of its launch on Thursday, as the Cloud-Gaming service prepares its much anticipated rollout at E3. The annual E3 trade show highlights the computer and video games industry and is presented by the Entertainment Software Association.

In the next few years, hardware specs could mean very little. Why buy a $2,000 PC when a fast Internet connection to the cloud could provide all the processing power and data storage that a family could need?

Already, companies such as Carbonite back up people's entire hard drives online. Now Apple and Amazon are rolling out services that let families store huge libraries of movies and music – far larger than could fit on any phone or tablet – and pull individual files down from the cloud when needed.

Another company, OnLive, saves gamers from buying expensive computer hardware by running processor-hungry video games on its servers, and then sends a video feed of those games to lower-end PCs. A player's controls go up to the cloud; video of the outcome seamlessly comes back down.

If such services take off, people could enjoy much cheaper computer prices – yet with a lot more monthly fees. Buying a new PC might feel more like picking cable packages.

Of course, phone companies and other Internet service providers are already imposing limits on how much data you can download each month, a policy that threatens to quash the whole idea, especially for mobile devices.

Better pick your provider carefully.

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