I have been talking to a lot of prospective cloud management start-ups lately, and a theme I am hearing repeatedly is that SMB is the great untapped opportunity. Most are hoping to be the RightScale for the SMB market by providing them with super simple web-based interfaces to clouds like EC2. What I’ve been telling them, is that unless they define SMB the way IBM does (when I was last working at IBM in 2005, eBay was classified as SMB), Cloud for SMB is a ship that has already sailed…

In support of this arguement is a post I read yesterday on VMBlog about Parallels providing ISV’s with a rapid route to delivering their software as a service through their ISP customers. Here’s the kicker, Parallels (formerly SWSoft of Plesk and Virtuozzo fame) claims a “customer base of more than 10,000 service providers, which represents approximately 90% of the global hosting market”. These service providers are ‘the cloud’ for the majority of SMBs and Parallels has been doing a great job of meeting their needs for years.

I recently spoke with a Parallels board member who expressed that the SMB customer is generally looking for core business applications that can be deployed with the click of a mouse button. Parallels products do this well, and this new SaaS enablement initiative will broaden the portfolio of applications they will be able to experience with the click of a button. Few SMBs are developing custom applications that will require the capabilities EC2 provides. Going forward, those that do build more significant customer facing internet applications are more likely to use a higher level cloud platform like Coghead or BungeeLabs.

So if you are thinking of entering the fray with a cloud management start-up, I suggest you look to the enterprise, not the SMB. For the near term, the needs of the SMB seem to be pretty well in hand.