James Urquhart asks, "Can any cloud catch Amazon Web Services?"

His answer: It's nearly impossible though it may happen eventually.

I couldn't disagree more with this analysis. Certainly, within a limited scope, Amazon shall remain dominant because of the reasons you listed. However, if Amazon were "all that", they would have captured a significant portion of the overall IT market by now, not just early adopters and developers. There are plenty of ways other companies can and will be able to compete with Amazon because as you pointed out, being the market leader pigeonholes you, and because Amazon's continuing and somewhat bizarre focus on an academically pure cloud product rather than a customer-oriented one. The points on which competitors may compete, just for starters, include...
- performance. Amazon's underlying architecture isn't performance-oriented, in part because of pricing
- price. Believe it or not, they're making a large markup on the service which can be undercut
- relationship Being closer to your customers than a web-based vending machine gets them to both spend more and be happier with the service
- flexibility. Hybrid private/public clouds, special-purpose hardware (yes, despite virtualization, hardware has an impact on applications!), custom IT solutions, etc. are all making money for a lot of MSPs, but the Amazon cloud model doesn't allow for them
- reliability. Need I say more? There are plenty of different reliability/price points available for entering the cloud market.
- technology. Amazon's combination of server-for-hire with distributed storage isn't the only way to implement cloud. Ask VMWare. The other alternatives offer advantages that other service providers can exploit.
- market segmentation. Amazon has done little to address the low and high ends of the cloud market, despite inking some large deals. We've won a number of important deals from Amazon because their price point, use model, or instance inventory weren't targeted at the particular customer.
There are many more differentiators, but suffice it to say that the world would be a boring place indeed and cloud would be facing a much longer adoption cycle if Amazon were the only provider, just it would if Amazon didn't exist.

This week's VMWorld conference was a bit of a surprise to me.   Held in Las Vegas, the expo was considerably smaller than previous years in San Francisco perhaps due to lower marketing budgets (or higher costs of attendance) since vendor's booths were smaller and less ambitious than in previous years.    But what was more interesting was the limited commercial focus of the event: provisioning.  This year's exhibitor focus was on getting VMs into the cloud with a wealth of provisioning systems including VMWare's new version of VCloud Director and an updated VSphere suite, but also many third-party provisioning tools.  And with all that provisioning, lots of new storage and networking capability will be needed, so there are plenty of hardware vendors selling servers, storage, and network gear.  Storage, in particular, is taking a spotlight as public and private cloud providers are discovering that existing storage systems are not up to the task of serving up demands of a virtualized infrastructure loaded with a wide variety of applications.   And to a lesser degree there was a focus on managing increasing quantities of virtual machines and storage as both enterprises and cloud providers are seeing that "virtual sprawl" can turn into "cloud sprawl".

However what was more interesting was what was *missing*: innovation about what to do with all those VMs once they were deployed.   The problem of provisioning is essentially solved; lots of software exists to allow users to create new VMs on demand (even if it's still basically Beta software!).   Lots of hardware exists to facilitate that.   There are still horrific problems with scalability that only the largest cloud providers have by and large solved, but it is now only a matter of time until they are solved.   There's lots of innovation in storage and networking coming to market to solve them.  However, making those VMs useful is still an open field.

This issue is the one that I believe will define the next year of  progress in Cloud Computing.   The fundamental need of cloud users is to run applications with acceptable performance and uptime, and very low management effort.   This is where the next wave of innovation will be focused.  These products will improve productivity for all concerned.  From the user's point of view, this will look like an evolution of VM provisioning into platform-as-a-service, with much greater options available for deploying applications rather than just empty or "golden" VMs.   For the cloud provider - internal or public - it will look like tools that make it easier to get customers what they want quickly, and keep them running without downtime.   In particular, the current PaaS offerings - highly integrated but very inflexible and suffering vendor lock-in - will be replaced with a more flexible set of tools that provision customers' VMs and multi-VM applications based on templates managed by vendors, but customized by the end-customer.   In addition, as familiarity with application deployment and management in the cloud builds within the industry, cloud frameworks and management tools will offer standard options for application-dependent auto-scaling, disaster recovery, version updating, and failure response.
While this will be a many-year journey, I think the challenges that will be faced by cloud users and providers alike as enterprises start to move more mission-critical applications into the cloud will drive significant innovation and move the level of cloud services ever closer to true Virtual IT.   On the other hand, reports from the field are that larger enterprises are still struggling with virtualization and not moving to the cloud as fast as the analysts are reporting - so they too are looking for more useful, integrated cloud services... in other words, Virtual IT.  Since this is ENKI's vision, you can count on us being there with best-in-breed tools, a continued emphasis on a rich relationship with our customers, and some surprises that we're working on to help our customers make the most of their virtual infrastructure.