There are few clearer bellwethers as to the imminent direction of technology than where venture capitalists put their money. They're about making money, so they look for industry patterns they think will lead to sure bets. And that means they invest where the tech industry has begun to coalesce its thinking, not on exotic new science fiction. According to PricewaterhouseCoopers, VCs have invested a total of US$57 billion in startups -- mostly tech ones -- in 2005, 2006, and 2007.

We also track tech startups but through a different lens. Our concern isn't about a financial investment but about real technology innovation -- what will drive technology forward in ways that could revolutionize some aspect of business IT? That's why for the third year, we have selected the hottest technology startups, with the emphasis on "technology." What did we seek? At least one of three qualities: truly new technologies, innovative approaches within existing technology areas, and technologies applied in new ways to solve different problems.

Here are the winners for 2008, in alphabetical order.

Hot Tech Startup: Aerohive Networks

Founded: 2006

Tech breakthrough: A centrally managed wireless network built around a controllerless architecture that can scale to thousands of access points.

Business problem addressed: As wireless networking becomes more central to the enterprise, wireless LANs need to become much faster, more scalable, and more resilient at a reasonable price point. By incorporating authentication, access control, and other functions into the access point, Aerohive promises greater flexibility and lower deployment costs than controller-based wireless LAN solutions.

What the technology does: There's long been a gap between so-called fat and thin access points in the world of wireless LANs. The earliest wireless LANs, in which fat (aka intelligent) access points handled every facet of communication between the client and the network, were quickly supplanted by a different configuration -- thinner (aka dumb) access points managed by a centralized controller. That's the architecture in general use today, and most IT staffers would assume that it's a given. Vendors have beefed up the intelligence of access points over the years, enabling them to carry out an increasingly sophisticated range of marching orders -- but those marching orders continue to come from a wireless LAN controller. Enter Aerohive, which has developed a hybrid architecture that features intelligent, linked access points without the use of an expensive controller. Even without that hardware, Aerohive offers centralized management, and the company says its Cooperative Control Wireless LAN Architecture can scale to thousands of access points. Furthermore, the decentralized architecture reduces the number of failure points. Aerohive access points are more expensive than conventional access points, but because there's no controller to pay for, the total cost of the network is lower, the company says.

How the technology works: The control element of the network, which has lived in the controller for the past few years, goes back into the access point, which Aerohive calls a HiveAP. Simply stated, a hive is a network of access points, generally in the same building. Each access point is aware of the other access points in the network.

Along with distributed control comes fully distributed data, allowing the HiveAP to route data directly to a desired destination without sending it first through a controller. How does this work in practice? When a client logs into the network, the access point builds a quick profile, including its identity, permission rights and so on, using a technology Aerohive calls predictive roaming. Predictive roaming is really an educated guess about which access point a client is likely to access next. When it makes that guess, the access point passes the client's profile on to a number of nearby access points, which are then ready to accept the client without dropping the signal.

Forward spin: Aerohive expects to ship 802.11n products in July.