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AT&T is the latest company to announce a "cloud computing" initiative. What does that term mean, and why is it important? I put that question to Dan Farber, editor in chief at CNET News.

The following is an edited transcript of our interview.

FARBER: Cloud computing is a term that's more recently come into favor. What it really means is if you use Google or Amazon or eBay, basically you get your computer and log into the Internet and go to these places. And everything they bring to your computer lives in the so-called cloud. The cloud simply represents this idea that outside your computer there are these servers and storage and networks that someone like a Google or Yahoo or eBay or Amazon has to deliver the content and services you want.

GORDON: I installed Microsoft Office on my daughter's MacBook as she prepares to go to college. When she writes a research paper on Word, she won't be in the cloud - this is an application sitting on her computer. But if I create a document on Google Documents, I am computing in the cloud. Is that accurate?

FARBER: That's accurate. And I think what we'll see over time is a hybrid. There are times when you want to take your data and applications with you. And even with Google Apps you can now run some of that code on your computer so whether you are connected to the Internet or not you still have that. But increasingly, because the Internet and Wi-fi and wireless networks are becoming so pervasive, people can see an endpoint when you don't need much on your own personal system. Almost everything can come from the cloud.

GORDON: Why are we hearing so much about cloud computing lately?

FARBER: More and more people are understanding that what Google and Amazon and other companies did, as opposed to Microsoft, is they figured out how to use really cheap computing equipment and rely on Moore's Law, which means that computing power is going to continue to rise and get cheaper, to build these massive data centers that can serve millions and millions, and potentially billions of people with computing services. And now the large companies have figured out maybe this is a good way to do business. For example you could say instead of every company having its own electrical plant, why not get your electricity from a utility, which is what happens today. Now that whole concept is being pushed to computing. Why not get all your computing resources from one of these giant utilities? Now we have AT&T and Verizon and Amazon and Google and even Microsoft getting into this business of utility computing, or cloud computing.

GORDON: Why should the average computer user care about whether their data is in a cloud or on their own machine?

FARBER: It's just like putting money in a bank. You want to what bank it's in, how the bank performs, you want to know whether your data is safe. So increasingly I think there will be more standards and practices that assure people that wherever their putting their data it is safe. But that's a long way off. I think people are still very skeptical.