Cloud computing primarily focuses on providing services to users. It allows individuals to run bigger applications or process large amounts of data without having the required storage or processing power on their personal computer, as long as they are connected to the Internet. It offers on-demand resources at a reasonable cost, eliminating the need for huge upfront investments. Examples include Google Doc and Microsoft Office 365, where software is accessed as a service.

In contrast, Grid computing is a network of geographically dispersed and heterogeneous computational resources. Its primary focus is to be application specific and create a sense of a virtual supercomputer with enormous processing power. The constituent resources, called nodes, temporarily come together to solve a single large task and reach a common goal. This is useful for solving computationally intense scientific and research problems without procuring costly hardware.

A major difference lies in their operational model. In cloud computing, specifically IaaS, a service provider rents the required infrastructure to the users. However, in grid computing, multiple computing nodes join together to solve a common computational problem. Grids can be Data grids for managing distributed data or CPU grids for parallel processing.