In the cloud: what startups need to succeed

With Google's recent launch of its App Engine, and with the likes of IBM and Amazon having staked claims, cloud computing is clearly a major development in the IT landscape. The benefits are obvious, enabling enterprises to scale rapidly with a level of performance previously available to only the largest companies -- all without adding equipment, software or staff.

It's early in the game -- consistent definitions aren't even agreed upon in the industry. Is utility computing really in the cloud? What about managed services? The major companies in the category will certainly drive the definition of cloud computing. But as usual, expect start-up companies to disrupt it.

So far, the market entrants have played to their strengths. Amazon is leveraging its tremendous computing capabilities by providing customers with a virtual computing environment via EC2. Salesforce is riding its software-as-a-service (SaaS) wave with Force.com -- dubbing it "platform-as-a-service" -- giving developers tools for creating business applications on-demand and without software. Pile on offerings from Sun, Yahoo, Ariba and more, all doing what they do best.

That still leaves plenty of room on the field for start-ups to do something different, which is what they do best. Unlike slow-moving market leaders, early-stage companies have the uncanny ability to identify beachheads adjacent to the market opportunities being established by the big boys. And more than that, they know how to move fast, growing right along with the niche market need they've chosen to address, turning that into a legitimate market which, in retrospect, looks obvious to everyone else. So what might be those beachheads in cloud computing?

To find their entry point, entrepreneurs will first need to determine what, in the enterprise infrastructure, can be cleaved off, or outsourced -- something the other players are not addressing yet. Cloud computing start-ups should work to find enterprise computing requirements that meet the following criteria: