He points to an August 2006, where Eric Schmidt of Google described there approach to SaaS as cloud computing at a search engine conference. I think this was the first high profile usage of the term, where not just “cloud” but “cloud computing” was used to refer to SaaS and since it was in the context Google, the term picked up the PaaS/IaaS connotations associated with the Google way of managing data centers and infrastructure. http://www.google.com/press/podium/ses2006.html (One common story indicates that Schmidt took the opportunity to use the term "cloud computing" in an attempt to steal some of the thunder from the Amazon Elastic Compute Cloud which was also launching later that same month in 2006, a classic example of Google "FUD" )
In my conversations with Amazon folks in spring of 2006 they had already begun refering to their "secret" utility computing project as an elastic compute cloud. So privately the term was already being fairly broadly discussed, as well as externally to Amazon, with people including me.
According to my editor on the forth coming "Cloud Computing: A strategy guide", Michael Loukides at O'Reilly, says the use of "cloud" at O'Reilly's as a metaphor for the Internet dates back to back to at least 1992, which is pretty close to the start of O'Reilly's publishing on networking topics. He goes on to say the idea of a "cloud" was already in common use then.
By 2006 the term cloud had grown to by the kind of catch phrase of the year, every blog, social widget, and web based application seemed to have some kind of cloud angle, only back then it refereed to a visual cloud of words, typically organized by size and frequency. So applying the term cloud to something other then the visual, would have fitted well into the hype cycle found within social applications in 2006.
In doing my research for the cloud guide, I think I have found the first public usage of the term "Cloud" as a metaphor for the Internet in a paper published by MIT in 1996. As side note, this article fully outlines most of the concepts which have become central to the ideas found within cloud computing. Certainly worth a read.
The Self-governing Internet: Coordination by Design
See Figure 1. The Internet's Confederation Approach
(Do find in your browser for "Figure 1" and see image)
Massachusetts Institute of Technology
Sharon Eisner Gillett
Center for Coordination Science
Sloan School of Management
Media Arts and Sciences
Coordination and Administration of the Internet
Workshop at Kennedy School of Government, Harvard University
September 8-10, 1996
Coordination of the Internet, edited by Brian Kahin and James Keller,
MIT Press, 1997