On January 1997, Compaq Computer was about to claim the most valuable mental territory in technology history.

Their marketing team, led by George Favaloro and technologist Sean O’Sullivan, had identified a position that would eventually define a $500+ billion market.

They’d written a press release about investing in NetCentric, and they were ready to claim it: “Cloud Computing.”

Then their PR team read it.

And killed it.

They changed “Cloud Computing” to “Internet Computing.”

Because the PR team wanted to describe what it was, not claim what it meant.

That single decision (made by people who thought positioning was about communication) cost Compaq the chance to own the most valuable mental territory in the history of technology.

Nine years later, Eric Schmidt stood on stage and claimed the position Compaq had abandoned:

“We call it cloud computing.”

This isn’t a story about bad PR decisions. It’s about why fake positioning experts (those who think positioning is merely messaging) undermine great positioning. And why the companies that understand positioning as mental territory ownership win everything.

The Position Compaq Abandoned

Compaq didn’t “coin a term.” They identified and claimed a position first. In November 1996, Favaloro and O’Sullivan wrote an internal business plan using “cloud computing” to describe their vision. They weren’t inventing words. They were claiming mental territory.

The position was: computing as abstraction. Where users don’t know or care about infrastructure, they just access capability from “somewhere.” This position owned a concept: computing as invisible utility.

Not “better computing.”
Not “cheaper computing.”
Not “faster computing.”

Computing as abstraction itself.

That’s a position. A noun. A concept. Mental territory. And Compaq was about to claim it publicly in January 1997 until their PR team intervened.

I can imagine the conversation:

PR Director: “We can’t use ‘cloud computing.’ What does that even mean? Call it ‘Internet computing.’”

Favaloro: “But Internet computing is generic. Cloud computing claims the position of abstraction.”

PR Director: “That’s the problem. It doesn’t describe anything. The market needs clarity.”

They changed it to “Internet Computing” and destroyed the position.

Because “Internet Computing” describes a delivery mechanism. “Cloud Computing” claimed mental territory.

This is what fake positioning experts do. They think positioning is about ‘descriptive’ clarity. About explaining what you do. About describing your service. They confuse positioning with communication. And they kill positions by turning them into descriptions.

What Real Positioning Looks Like

Fast forward to August 9, 2006. Eric Schmidt takes the stage at the Search Engine Strategies Conference and claims the position:

“What’s interesting now is that there is an emergent new model. I don’t think people have really understood how big this opportunity really is. It starts with the premise that the data services and architecture should be on servers. We call it cloud computing. They should be in a ‘cloud’ somewhere.”

Notice what Schmidt did. He didn’t describe cloud computing. He didn’t explain the technical architecture. He didn’t compare it to anything.

He just claimed the position.

“They should be in a ‘cloud’ somewhere.” Somewhere. Not “in our data centers using distributed architecture.” Not “on virtualized servers with redundancy.”

Somewhere.

That’s positioning. Owning a concept, not describing a service.

Schmidt understood that claiming mental territory requires embracing what fake experts call “vagueness.” Because vagueness isn’t a bug in positioning, it’s a feature.

The Cloud doesn’t describe. It claims.

The Company That Stole the Position

While Google claimed the position publicly, Amazon was quietly building the capability to own it. Amazon Web Services launched S3 in March 2006, five months before Schmidt’s speech. 12,000 developers signed up on the first day. AWS launched EC2 in August 2006.

But AWS wasn’t positioning around “cloud computing.” They were positioning around utility computing. Web services. Infrastructure as a service. And it worked. Because Amazon understood something critical:

Claiming a position gives you temporary authority. But proving it through infrastructure and distribution gives you permanent ownership.

Google claimed the “Cloud” in 2006. But by 2010, when customers thought “Cloud,” they thought AWS. Not because Amazon had better messaging. Because they could prove the position better than anyone else.

You don’t own positions by claiming them. You own positions by proving them.

Schmidt gave Google temporary ‘thought leadership.’ However, Amazon had the infrastructure and distribution to claim ownership eventually. Because positions aren’t owned through communication, they’re owned through capability and capital allocation.

Why Positioning Drives Everything

People think Amazon succeeded with “product first, positioning second.”

Wrong.

Amazon had clear positioning from day one. Their position: computing as utility. Pay for what you use. No upfront investment. Scale on demand.

This position drove their business model:

• Pay-as-you-go pricing
• API-first architecture
• Developer self-service
• Minimal human interaction
• Horizontal scaling

Every business decision flowed from the position. Not from the product. The position drove the product strategy.

This is how I describe it:

Traditional (wrong): Market → Product → Position
Reality (correct): Position → Business Model → Market

Amazon didn’t build infrastructure and then position it. They claimed a position (utility computing) and built infrastructure to prove it. They just didn’t have the concept “Cloud” initially.

When Schmidt claimed “Cloud” as a position, Amazon recognized it as better mental territory than “utility computing.” So they stole it. Not through better messaging. Through better capability to prove it.

By 2010, AWS owned “Cloud” in customers’ minds because they had the infrastructure and distribution to deliver on the position better than anyone else.

The Multi-Company Battle for Mental Territory

Multiple companies tried to claim and own the same mental territory. And each won different battles.

Google claimed the position publicly first (2006) and won temporary thought leadership.

Amazon had the infrastructure to prove it and eventually owned the position through delivery (by 2010).

Microsoft committed billions and stole enterprise adoption (Azure, 2008-2010) by leveraging existing distribution.

Salesforce retroactively claimed category creation (2009) by repositioning its SaaS model within the Cloud narrative.

IBM tried to legitimize it for risk-averse enterprises, but arrived too late as a clear follower.

Each company brought different capabilities. But only one could truly own the position. And ownership went to the company that could prove it through delivery at scale. Amazon.

Not because they claimed it first. Because they had the capability to own it permanently.

The company with the greatest capability to deliver on a position will eventually own it, even if someone else claimed it first.

Distribution beats claiming. Proof beats messaging. Capability beats communication.

Why the Metaphor Matters

The “Cloud” as a position beat its competitors because every alternative described rather than claimed:

Utility Computing – described the billing model. Too narrow.

Grid Computing – described the architecture. Too technical.

Software as a Service – described the delivery model. Too specific.

Internet Computing – described the network. Too generic.

Every single one of these was more technically accurate than “Cloud.” And every single one lost to a metaphor. Because “Cloud” wasn’t trying to be accurate. It was trying to own a concept.

“Utility Computing” tells you how you pay.
“Cloud” owns abstraction as a concept.

“Grid Computing” tells you how it’s architected.
“The Cloud” owns invisibility as a position.

“Internet Computing” tells you where it runs.
“The Cloud” owns omnipresence as mental territory.

Descriptions compete on features. Positions own concepts.

Compaq’s PR team killed their position by turning it into a description. They chose “Internet Computing” because it was clear. And lost $500 billion in mental territory because clarity isn’t a positioning strategy.

The Strategic Lessons

Lesson 1: Positions Are Nouns, Not Adjectives

“Internet” is an adjective modifying “computing.” “Cloud” became a noun, a thing, a concept, a mental territory. You can’t own adjectives. You own nouns. If your positioning describes what you do rather than claims what you mean, you don’t have positioning. You have a description.

Lesson 2: Claiming Gives Authority, Proving Gives Ownership

Google claimed the position in 2006. Amazon owned it by 2010. Because claiming creates temporary thought leadership. But proving creates permanent ownership. Don’t just claim positions. Build the capability to own them through delivery, distribution, and proof.

Lesson 3: Distribution Beats Messaging

Amazon didn’t have the concept of “Cloud” initially. Google claimed it. But Amazon had 12,000 developers using S3 on day one. Distribution beat messaging. Capability beats claiming. Proof beats communication.

Lesson 4: Position Drives Business Model

Amazon didn’t build infrastructure and then position it. Their position (computing as utility) drove every business decision.

Position → Business Model → Market. Not the other way around.

Lesson 5: Multi-Company Evangelism Expands Markets

Google, Amazon, Microsoft, Salesforce, and IBM all evangelized “Cloud” while competing on implementation. This multi-company adoption created network effects that expanded the total market faster than any single company could have grown alone.

Lesson 6: Fake Experts Optimize for Description

Compaq’s PR team killed the position because they wanted to “make it clear.” They optimized for immediate understanding and destroyed mental territory ownership. Keep communications people away from positioning decisions. Their job is to communicate the position, not to define it.

The Attribution Battle Nobody Wins

Multiple people claim credit for “inventing” cloud computing:

• David Hoffman at General Magic (1994) – created the metaphor
• Compaq team (1996) – first claimed the position in a business context
• Professor Chellappa (1997) – provided an academic definition
• Eric Schmidt (2006) – claimed it publicly for a mainstream audience

But none of them own it. Amazon does. Because attribution doesn’t matter. Ownership does. You don’t own what you invented. You don’t own what you claimed first. You don’t own what you defined academically.

You own what you prove through capability and distribution.

Compaq claimed it first. They got zero value. Schmidt claimed it publicly. Google got temporary thought leadership. Amazon proved it at scale. They own it permanently.

That’s positioning.

What Compaq Actually Lost

Compaq’s PR team thought they were choosing between two terms. They were actually choosing between owning how customers think about computing and being completely forgotten.

If Compaq had publicly claimed “Cloud” in January 1997, every tech journalist from 1997-2000 would have written about Compaq’s vision. Every competitor would have been positioned relative to Compaq’s framing. Even when NetCentric failed commercially, the position would have outlived the product.

Just like Google claimed thought leadership in 2006 despite not having AWS’s infrastructure. But Compaq’s PR team wanted description over ownership. They wanted clarity over mental territory. They wanted to explain what it was instead of claiming what it meant.

And they threw away the most valuable position in technology history. For “Internet Computing.” A description nobody remembers.

The Real Paradox

The more you describe, the less you own. The more you claim, the more territory you capture.

Compaq wanted to be clear. They chose “Internet Computing” because everyone understood the Internet. And they got zero positioning value.

Schmidt chose “Cloud” because it was abstract. And Google won thought leadership because abstraction creates mental territory.

Amazon proved “Cloud” through infrastructure. And they own the position because capability creates permanent ownership.

The lesson isn’t that you should be vague for vagueness’s sake. It’s that positions claim concepts, they don’t describe features. And concepts require abstraction.

Conclusion: Mental Territory Can’t Be Described

Compaq claimed “Cloud” as a position in November 1996. They rejected it in January 1997 because their PR team wanted to describe instead of claim.

Eric Schmidt claimed it publicly in August 2006. Google won temporary thought leadership.

Amazon proved it through infrastructure and distribution. They own it permanently.

And Compaq? They got nothing. Not market share. Not thought leadership. Not even credit for claiming the position first.

Because they had people who thought positioning was about communication. Who believed their job was to “make things clear.” Who optimized for description over ownership.

Positioning isn’t communication.
It’s not messaging.
It’s not branding.
It’s not terminology.

Positioning is mental territory ownership.

And you own mental territory by claiming concepts, not describing features. Compaq could have claimed the most valuable position in technology. Instead, they chose ‘descriptive’ clarity.

And nobody remembers “Internet Computing.”

But everyone knows “Cloud.”

Not because it’s clearer. Because it claims mental territory.

That’s positioning.

Don’t be Compaq. Claim positions. Build the capability to prove them. And let your communications team figure out how to talk about the mental territory you own. Not the other way around. Because mental territory can’t be described, it can only be claimed and proven.

$500 billion worth of proof.