At first glance, virtualization and cloud computing may sound like similar things, but each one has a broader definition that can be applied to many different kinds of systems. Both virtualization and cloud computing are often virtual in the sense that they rely on similar models and principles. However, cloud computing and virtualization are inherently different.
Virtualization is simply the replacement of some physical component with a virtual one. Within this broad definition, there are specific types of virtualization, such as virtual storage devices, virtual machines, virtual operating systems and virtual network components for network virtualization. Virtualization just means that someone built a model for something, such as a machine or server, into code, creating a software program function that acts like what it’s modeling. For instance, a virtual server sends and receives signals just like a physical one, even though it doesn’t have its own circuitry and other physical components.
Network virtualization is the closest type of virtualization to the kinds of setups known as cloud computing. In network virtualization, individual servers and other components are replaced by logical identifiers, rather than physical hardware pieces. For example, a virtual machine is a software representation of a computer, rather than an actual computer. Network virtualization is used for testing environments as well as actual network implementation.
Cloud computing, on the other hand, is a specific kind of IT setup that involves multiple computers or hardware pieces sending data through a wireless or IP-connected network. In most cases, cloud computing environments involve sending inputted data to remote locations through a somewhat abstract network trajectory known as "the cloud." With the popularity of cloud computing services, more and more people are understanding the cloud as a storage environment supplied by vendors that assume responsibility for data and archive security.
In short, cloud computing is a reference to specific kinds of vendor-provided network setups, where virtualization is the more general process of replacing tangible devices and controls with a system where software manages more of a network’s processes.