With gasometers on one side and a dilapidated railway line on the other, the red-brick Abbey industrial estate on the outskirts of St Albans in Hertfordshire looks about as “old economy” as it gets. It’s the last place you would go if you were searching for the white-hot centre of a technological revolution. But if you want to know how the future might look, it’s the place to come.

The man you need to see is Peter Sianchuk, a 43-year-old from Middlesbrough. He looks pretty ordinary. He wears a blue open-neck shirt and drives a black saloon car. The only clue that he is doing something special is on the wall of his office. It’s a picture of Bruce Willis in The Sixth Sense, next to a reworking of the film’s best-known dialogue. “I see stupid people,” it reads. “They’re everywhere. They walk around like everyone else. They don’t even know that they are dumb.”

Okay, Sianchuk may be a little pleased with himself, but he has reason to be. He’s done something that, if it works, will put himself and his firm, Serena, a global software developer and manager, at the forefront of a technological shift that will revolutionise the way we think about information. “What’s happening is something no one had thought of even five years ago,” he says. “It’s changing everything.” The “it” he’s talking about is what geeks refer to as “the cloud”. You may have heard of it. The puffy buzzword is beginning to leak out of the hi-tech labs of Silicon Valley. Even if you haven’t, the chances are you’ve used the cloud, via Gmail, Facebook, Twitter, YouTube, Flickr or the music-streaming service Spotify.

If it takes off, we’ll soon be reading anything published anywhere in the world on our eReader, such as the Kindle from Amazon. We’ll be streaming films on to our netbook. We’ll be downloading music on to our iPod — wherever we find ourselves. We’ll be shooting videos with our web-enabled camera and beaming them in seconds to Facebook. We’ll be sitting in our doctor’s surgery, pulling up our medical records on our laptop. So will our doctor.

The cloud is such a big deal that Nicholas Carr, author of The Big Switch, which charts its rise, likens it to the creation of the national grid: “What electricity brought to mechanical power, the cloud is doing to information technology.” For a big idea, the cloud is — fortunately — remarkably simple. It means that the electronic information we want is stored and processed on computers somewhere else — in the cloud — and delivered to us where, when and how we need it.

Today, most of us use electronic devices with closed systems. Each device creates and stores certain types of information. We store Word documents and spreadsheets on our laptop and PC, contacts and e-mails on our mobile, TV and video on our television and set-top box, and music on our iPod. The cloud reverses that model. Cloud-based devices create and store nothing. They are merely connecting devices that draw down the information we need. Computing best illustrates the shift. In the cloud, the internet becomes our operating system. We use online software that runs in our browser to create the files we need. The files are stored in remote data centres.

That’s what Sianchuk has done. His firm is the first big UK company to dump the physical hard drives. He and his colleagues now live in the cloud. He taps his password into his MacBook Pro laptop and thousands of files, spreadsheets, e-mails, contacts and a giant corporate grid showing the progress of all his projects around the world appear in a series of online windows. The names on the screen are some of the world’s biggest blue-chip firms — Boeing, Honda, Nestlé, Disney. Serena manages software for all of them.

Using the internet to access the information we need is, of course, not new. Facebook, YouTube, Hotmail, Flickr and Spotify already demonstrate the huge benefits of having our stuff “out there”. What is new is the way that hi-tech companies are rushing to exploit the digitisation of almost all information and a world blanketed with Wi-Fi to create complete, easily accessible online information systems. The “always on, always there” revolution is such big news that the leading Silicon Valley investor George Zachary describes it as “the new dotcom”.

Why are the technorati so excited? The cloud offers dramatic, practical benefits. We can get the “stuff” we need, no matter where we are or what device we’re using because every device with an internet connection is “ours”. As Randall Stross, the author of Planet Google, puts it: “The headaches we’ve wrestled with in the past, for example, ‘I edited that document at the office but I didn’t bring a copy home with me’, will disappear.” Moreover, we never need to buy any software updates because these are tested and constantly sprinkled into the cloud by operators. There are no licence fees to pay. Best of all, we never have to worry about losing our laptop or mobile phone or backing up their contents because no important data is stored on the devices.

The cloud may be new but it is already transforming IT and electronics. Retailers have all but stopped competing to sell us IT hardware and software. These days they are giving away networked devices — mobile phones, laptops, netbooks and eReaders — with annual or pay-as-you-go service packages in an effort to get us to spend more time on the cloud, because that’s where the content, and therefore the cash, is. Charles Dunstone, who runs Carphone Warehouse, says: “We don’t sell ‘stuff’ any more. We sell connectivity because it is the gateway to the online marketplace.”

What’s on offer in the new cyber market? Better, cheaper computing, for a start. Sign up today and Google will give you full online word processing, spreadsheets, its Gmail e-mail system, contacts database, photo storage and sharing, Google Earth and Google Maps, presentation software and blogging services, plus data storage for nothing. Companies have to pay, but the fee is far lower than for traditional systems. Sianchuk says he has slashed Serena’s IT bill from £500,000 a year to £25,000 by signing up to Google’s cloud.

Apple offers a suite of applications — e-mail, calendar, image sharing — called MobileMe, and charges users a subscription of £59 a year. Microsoft has opted for a halfway house: run your computer in the traditional way when you can, the firm says, but go online and use Office Live and Windows Azure — no nasty clouds, only blue skies in Seattle — when you are not using your own PC or when it’s more convenient.

The cloud is transforming mobile phones, too, turning our handsets from devices that call and text into hand-held gateways to the networked world. Apple’s iPhone has been such a remarkable success — it is the fastest-selling smartphone ever — because it syncs with MobileMe and gives consumers access to all their personal files and e-mail, as well as YouTube, news, weather, maps and share prices.

Google has launched its first handsets, the G1 and the HTC Magic, with an inbuilt system called Android to interact with the cloud. It offers extraordinary cloud-based applications. Take ShopSavvy. Press a button and the phone’s camera turns into a bar-code scanner. Scan the bar code of a product you want to buy and the handset will tell you where you can buy it at the lowest price and pinpoint the shop with that price on a Google Map. The mobile-phone operator 3 offers smartphones, notably the INQ1, with new ways to use Facebook, MSN and the free internet telephone service Skype. The INQ1 automatically displays a caller’s Facebook profile picture.

Almost any device or information service you can think of will be better if it is linked to the cloud. And many soon will be. From next year, all new televisions will come with an internet connection, so we will be able to watch YouTube and the BBC’s iPlayer on TV, not just our computers. Video cameras are being fitted with internet connections, so that high-quality film can be automatically uploaded to the likes of Facebook.

The cloud is so powerful it is transforming more than IT. It heralds a wave of disruption across the business landscape. Take media. For almost a decade, media bosses have watched, seemingly helplessly, as the internet has ravaged their industries by luring readers, viewers, listeners and advertisers online. But now media executives are daring to hope that the internet, thanks to the cloud, might actually be their salvation. In the US, the slump in advertising, high printing costs and the migration of readers online means leading titles — even The New York Times — are struggling for survival. But, say newspaper bosses, imagine a world in which readers can “stream” stories that match their interests from the cloud direct to their eReader or netbook. That would be worth, say, around £120 a year to consumers and many millions to advertisers, wouldn’t it?

Last month, three US papers — The New York Times, The Boston Globe and The Washington Post — said they would offer a discount on the new Kindle DX to readers outside home-delivery areas who took out a subscription. In all, 37 papers, mostly American but featuring a handful of international publications, notably the UK-based Economist, are now available as Kindle subscriptions. If eReaders become newspapers’ answer to the iPod, newspapers could even one day dispense with a chunk of their costly paper and ink and distribution by road, rail and air.

Music executives, who have seen legal and illegal online file-sharing sites kill off CD sales, now think that their industry has a future, too. They want to use the cloud to give us the chance to listen to any song ever recorded, on any device we want, wherever we are. Mobile-phone operators, such as 3, and handset makers, notably Nokia, are beginning to offer packages that include unlimited music downloads from the cloud. Record companies get a cut every time a song is downloaded. Licensed-streaming services, such as MySpace Music and Spotify, where users can play any song, any time on their computer or mobile phone, are either free with ads or subscribers pay a fee for an ad-free service.

Hard-pressed TV executives are pinning their hopes on internet TV services. Hulu is a website that stores hundreds of thousands of hours of programming — the latest Ugly Betty, classic sitcoms, the odd Hollywood movie — that viewers can watch on their computer and, soon, their TV. Hulu’s growth has been explosive, up 490% year on year, according to Nielsen Online. It is the third most-watched video site in the US and will launch here this autumn.

The BBC, ITV and BT are working on a rival service, Project Canvas, which will deliver the internet to our televisions via an ethernet port on set-top boxes and enable us to go back in time and watch old shows as well as look ahead in the schedules. Executives hope viewers will find the new services so useful that they will soon be able to introduce subscription fees. Robert Iger, president and CEO of Disney, which owns 27% of Hulu, says: “People are willing to pay for quality, choice and convenience.”

Some technocrats predict that, thanks to the cloud, one day soon all media will come together: we will carry around a single device to read newspapers, watch TV, listen to music, access our personal data and surf the web. Apple is already working on a portable, wafer-thin, tablet-sized computer that is always online. The new devices will be free or subsidised, but we will pay for the information we download, using tariffs similar to those for our mobiles: pay-as-you-go for light users and all-you-can-eat deals for heavy users.

It’s whizzy stuff, alright. But should we believe in the wisdom of clouds? There are several practical — and one giant ethical — problems that could turn it into a thunderstorm. Living, working and playing online may be convenient, but it raises serious issues surrounding privacy and security. To sign up for many cloud services, we need to reveal personal information, such as our date of birth. Once online, we effectively surrender our data — files, e-mails, photos, our location, what we listen to, in effect, our own 24/7 digital footprint — to a third party.

“Individuals and firms must ask themselves, ‘How much information do we really want hosted off-site?’ ” says Don Pollock of Deloitte Consulting. Cloud operators point out that all personal data is username- and password-protected, but critics are unimpressed. “Put enough data in a container and it will eventually spring a leak,” says Planet Google’s Stross.

It already has. A hacker recently guessed the password to the personal e-mail account of a Twitter employee, then used it to access the employee’s Google cloud services and found documents that revealed Twitter’s secret business projections. The documents were leaked to the US website TechCrunch. “Before, the bad guys needed to get their hands on people’s computers to see their secrets; in today’s cloud, all you need is a password,” warns Jonathan Zittrain, a law professor at Harvard and author of The Future of the Internet — And How to Stop It.

Data storage is risky, too. Users will worry that they might lose their personal-computer files and other vital information if Google’s or Apple’s headquarters in California were destroyed by fire, natural disaster or terrorist attack. Cloud providers insist that our data is held on servers in several different places all over the world and they point out that the locations are secret. They add that if we are really worried, we can carry on backing up our work on CDs or Zip drives.

Critics say we should. Chatrooms buzz with stories of cloud users who have had their accounts terminated, locking them out of everything from the data they need for their work to family snaps. Kindle owners in the US recently found that Amazon had used the cloud to reach into their Kindles and remove copies of George Orwell’s novel Nineteen Eighty-Four after a copyright dispute with the book’s pub-lisher. Orwell would, doubtless, have been amused. Consumers, who were left with the first recorded case of buyer’s “E-morse”, were not.

Another cause for unease is that web-search companies, notably Google, make money from the cloud by analysing our key search words to send us targeted advertising. Every other cloud operator is moving into this online market that analysts say will be worth £10 billion by 2011. Critics fear that as competition heats up, operators will “data-mine” our personal information, including our documents and viewing and listening history, to build up detailed personal profiles to better target ads at us.

Then there is the fact that, while the cloud may be free or cheap now, it might not stay that way. Once we’re hooked, critics say, hefty charges are sure to appear. Richard Stallman, founder of the Free Software Foundation, dismisses the cloud as a trap. “It’s stupidity. It’s a marketing hype campaign,” he says. Even at current usage levels, the internet is already under strain. There have been several serious interruptions in service in recent months, notably when news of Michael Jackson’s death began to spread. Every year, the equivalent of 40,000 years of television is added to the web and the number of web users is forecast to rise from 1.5 billion today to 2.2 billion by 2013. What will happen when we all start trying to access every kind of media via a single device? Observers say the only way to guarantee reliable service is to meter it. Broadband providers, such as BT and Tiscali, are already planning charges for bandwidth-hungry video services.

Most serious of all, the entire system risks creating a giant electronic Big Brother. Every technology firm is competing to dominate the cloud. The winner could eventually control it and “own” all the personal data it contains; every e-mail ever written, every contact ever recorded, every file created, every picture saved, every search query. It would become your, my, everyone’s electronic “brain”. Not only that, this electronic behemoth would decide what software we get to use and how — power that Microsoft’s Bill Gates never dreamt of when he was the king of Windows.

Will the cloud take off? Cloud services are most advanced in the US, and if the figures there are a good predictor, the dual attractions of price and convenience will persuade most of us to set aside concerns about privacy — just as millions of us currently do by signing up to social-networking sites. More than two-thirds of American adults use some kind of cloud service. Two thousand American companies a week are adopting cloud-based technology. Corporate spending on cloud computing will reach $42 billion by 2012, say the analysts IDC, and cloud-computing revenues will reach $160 billion globally in 2011, predicts Merrill Lynch.

Back in his office in St Albans, Serena’s Peter Sianchuk has no doubt that the outlook is cloud-dominated, even for the faint of tech. He walks to the window and looks through the soft rain falling from a real cloud over the car park next to the gasometers. There’s a woman walking towards her car. She’s sending a text message. He won’t say it, of course, but he regards her as one of the “dumb people walking around everywhere who do not know how dumb they are”. “Look at her,” Sianchuk says. “She probably has some MP3 files on that phone, e-mail and a contacts book. She probably still regards all of that as pretty cool technology, but just wait until she gets her head around the cloud. It will be like a new day.”

It will be, provided she — we — are prepared to disappear into thin air.