An educational (and lightly sarcastic) history
Cloud computing was, by most respectable predictions of 1999, a passing fad.
This is the story of how that “fad” burned through hundreds of millions in venture capital, wiped out an entire category of company called the ASP, got quietly buried by the trade press — and came back as the roughly $900-billion-a-year backbone of the internet. With receipts.
- 500+Application service providers launched by 2000, selling roughly today's SaaS pitch
- $25.3BGartner's 2004 revenue forecast for that ASP market. It did not arrive.
- ~$918BEstimated global cloud computing market, 2026
- ~67%Share of that market held by just three companies
Chapter One · 1997–2002
The years everyone was, technically, correct
Before “the cloud” meant anything you'd trust with a credit card number, it meant renting access to somebody else's server over a dial-up-era internet connection, run by a company that was very likely losing money on every customer it signed.
Chapter Two · 2006–Today
The fad that became the infrastructure
Amazon launched S3 (storage) in March 2006 and EC2 (compute) that August, popularizing “cloud computing” in the commercial sense the term still carries. Twenty years on, the numbers no longer look like a fad by any definition — they look like a utility.
So, was it a fad?
Technically, yes — plenty of respected analysts called it one, in print, with specific dollar figures attached to prove it. Gartner's $25.3 billion ASP forecast for 2004 wasn't wrong because the idea was bad; it was wrong because it was pricing a twenty-five-year infrastructure buildout on a two-year hype cycle.
Frequently asked questions
Was cloud computing a fad?
Many analysts treated it as one. Between 1999 and 2002, hundreds of application service providers launched, Gartner forecast $25.3 billion in ASP revenue for 2004, and the category was largely wiped out. The idea was sound; the timing and the balance sheets were not. Amazon launched S3 in March 2006 and EC2 that August, and the cloud became infrastructure.
When was the term “cloud computing” first used?
The earliest known written use is in a 1996 internal Compaq strategy document. In 1997, Emory University professor Ramnath Chellappa used the term in a lecture on demand-based computing economics.
What was an ASP (application service provider)?
An ASP rented business software, such as ERP and CRM, over the internet instead of requiring customers to install it. The ASP Industry Consortium was founded in May 1999 by 25 companies including Cisco, more than 500 ASPs had launched by 2000, and the category was largely wiped out in 2001–2002.
What happened to Loudcloud?
Founded in September 1999 by Marc Andreessen, Ben Horowitz, and Tim Howes, Loudcloud sold its managed-hosting business to EDS in 2002 for $63.5 million and rebranded as Opsware.
Who dominates the cloud market today?
AWS (about 30%), Microsoft Azure (about 24%), and Google Cloud (about 13%) together hold roughly 67% of the market, according to Synergy Research Group, Q1 2026.
How big is the cloud computing market?
The global cloud computing market is estimated at about $918 billion in 2026, on pace to cross $1 trillion, according to industry market trackers.
Reference & further reading
Every modern figure on this site is labeled with its source. See the full list of sources and further reading.