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The actual term "cloud" borrows from telephony in that telecommunications companies, who until the 1990s primarily offered dedicated point-to-point data circuits, began offering Virtual Private Network (VPN) services with comparable quality of service but at a much lower cost. By switching traffic to balance utilization as they saw fit, they were able to utilize their overall network bandwidth more effectively. The cloud symbol was used to denote the demarcation point between that which was the responsibility of the provider from that of the user. Cloud computing extends this boundary to cover servers as well as the network infrastructure. The first scholarly use of the term "cloud computing" was in a 1997 lecture by Ramnath Chellappa.

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