First came SaaS, enabling application delivery through the cloud. Then came IaaS, providing the elastic infrastructure for enterprises to host their data and applications in the cloud. But the middle of the cloud-stack – the Platform as a Service, the layer that abstracts out the underlying infrastructure and enables enterprises to develop their own custom cloud-based apps in a simple way – never really caught fire. Maybe that will change soon, with last week’s official launch of Pivotal being a potential catalyst. With $105 million from GE that values the company at more than $1 billion, Pivotal is a newly formed entity that wants to provide ‘Google in a box’ PaaS solutions using technologies and resources borrowed from its creators EMC and VMware.

This is what corporate innovation looks like – two giants spinning out a massive virtual team armed with access to large technology building blocks, funded to the tune of an eight figure sum by a corporation that could serve as the ideal pilot for the new technology across the ‘industrial internet’. Yet, they will be going up against other large players, and some small players, all while the market continues to figure out what it really wants from its PaaS vendors. While SaaS was about lower capex and IaaS was about elasticity, PaaS is about developer choice. So, it remains to be seen whether the market will, like GE, embrace a vertically integrated PaaS from EMC-VMware or whether it will prefer a neutral arms-dealer provider that gives the developer complete freedom on options.

Could GE’s $105 million investment in Pivotal be enough money to deter further early stage investment in PaaS? Is cloud middleware beyond the realm of venture capital compatibility at this time? Probably not, but the bar is now higher. By its nature, PaaS is not for small and medium businesses, because most of them cannot afford to have developers build custom apps and would rather use combinations of SaaS offerings instead. And now, with Pivotal, the competition for the large customers is that much more intense. Which means consolidation should soon be in the air, and with that, another innovation frontier will be been established and solidified!