Cloud computing is a development of parallel computing, distributed computing, grid computing and virtualization technologies which define the shape of new era. Cloud computing is an emerging model of business computing. In this paper, we explore the concept of cloud architecture and compare cloud computing with grid computing. We also address the characteristics and applications of several popular cloud computing platforms. In this paper, we aim to pinpoint the challenges and issues of cloud computing. We identified several challenges from the cloud computing adoption perspective and also highlighted the cloud interoperability issue that deserves substantial further research and development. However, security and privacy issues present a strong barrier for users to adapt into cloud computing systems. In this paper, we investigate several cloud computing system providers about their concerns on security and privacy issues