IaaS : IaaS is an acronym for Infrastructure as a Service. This is a cloud computing offering where the provider sells the consumer basic compute services (typically storage and/or compute capabilities) that can be consumed and billed for as required. So instead of buying physical disks and rack servers the consumer “rents” storage and compute of the provider. Amazon, Microsoft, RackSpace, GoGrid and Joyent are all IaaS Vendors.

PaaS: PaaS is an acronym for Platform as a Service. This is a cloud computing offering that offers a higher range of services. Rather than renting raw components, the consumer rents a complete environment that provides integrated services such as load balancing, automatic scaling and storage management. The consumer provides an application that complies with the particular PaaS coding requirements and uses the PaaS deployment tools to create a live application. Microsoft Azure and Google AppEngine are two of the most popular PaaS providers.

SaaS: SaaS is an acronym for Software as a Service. In this cloud computing offering consumers rent end user services directly. Instead of getting a house into which they deploy an application (as in IaaS and PaaS) they actually rent the application directly. Payment is generally made on a per-user per-month basis. In the case of SaaS payment is made whether the application is used or not. Salesforce.com is the most famouse SaaS application.