VentureBeat

It may not be much to look at, but CherryPal’s new device — a $249 paperback-sized box containing an underpowered processor and a token amount of memory — is a forerunner of the oncoming revolution in “cloud” computing.

You just stick in any keyboard or mouse with a USB connector and any standard monitor (VGA), and you’re up and running.

Of course, being one of the first to do something doesn’t equate to being successful at it. But the CherryPal should excite anyone who believes that the average computer of the future will not only be Internet-connected, but also Internet-controlled. The CherryPal, set to begin shipping at the end of this month, is a true cloud computer, meaning almost all if its applications and data are stored online.

A cloud computer is desirable for a few reasons. One is that small chips like the CherryPal’s 400 MHz Freescale processor can handle more tasks with the help of an outside server. Individual devices almost never need upgrades, and are harder to infect with viruses. Upgrades are also possible without replacing the computer, and files are accessible from anywhere. And the CherryPal requires only two watts to run, much less than a normal computer.

Those reasons are why CherryPal hopes its device can rise past the more powerful competition to win a spot in the hearts of consumers. CEO Max Seybold says he hopes that students and less computer-savvy people will latch onto CherryPal as an alternative to traditional computers.

Computing experts will likely suggest that it’s most useful as a secondary device to a home desktop or laptop. That’s probably true for you or I, but a substantial population of people who don’t care about computing power may be perfectly satisfied using only a CherryPal. However, there’s a wide array of competition awaiting the new device.

Among them are companies like Apple, with its Mac Mini, and Shuttle, which sells the KPC starting at $229. There’s also Zonbu, which has a “hybrid” system that goes partway toward cloud computing for $299 — although getting all the features of the cloud requires an extra subscription fee, while CherryPal’s is free.

CherryPal plans to market its device as being both simpler to operate than other computers and, because of its light construction and low energy use, as a “green” computer. However, it’s also not the first to use that approach. Wal-Mart said the same about its Everex gPC, which runs a version of Linux customized to hook up to Google Apps. Despite quickly selling out of its first run of 10,000 computers, Wal-Mart was dissatisfied with the results and stopped offering it in stores. It still sells the gPC online, for $150.

Seybold says the CherryPal will offer better performance than such down-market systems, similar to a 2GHz computer running Windows Vista (unlike Windows, Seybold says the CherryPal is “unhackable”). But because of the wide array of competition, CherryPal’s success will hinge on its marketing efforts, which is more of an artistic than technical endeavor.

Still, the release of the CherryPal is an interesting first stab at a cloud device. Along with web-based operating systems like Gh.o.st and Pi, the CherryPal may help blaze a path away from the major device-based operating systems, Mac OS and Windows, each of which has its share of problems.

And for computer manufacturers, the CherryPal presents a whole different set of problems. Mike Bryars, a global manager at Freescale, says his company will do well selling chips for “embedded” computing. “Traditional PCs are great for productivity, but they’re not optimal devices. Why do people buy iPods when they can listen to MP3s on a laptop? At the end of the day, it’s a better device,” he says.

Computer makers like Dell won’t be pleased with the idea of having a device for each application, when they want to sell expensive, full-featured systems instead; smaller devices are generally assumed to offer lower margins. However, when I asked Seybold whether his company could survive without hitting its target of hundreds of thousands to millions of units sold, he said that it could still turn a profit on “ridiculously few” units sold if necessary.

CherryPal, based in Mountain View, Calif., raised its funding outside the US. It has taken over $5 million so far, from a Hong Kong-based private equity firm called Tristate and a group of angels in the United Kingdom.

updated: clarifying total funding

G.ho.st, the company that wants to give you a free “virtual computer” to perform most of your computer tasks from any browser, has raised $1 million more in backing.

G.ho.st is notable because it may be first joint Palestinian-Israeli technology start-up, with its development work based in the Palestinian territories. We’d written earlier the company had raised $2 million, so this new round brings it to total of $3 million. Benchmark Capital is the lead investor. VentureBeat wrote about G.ho.st last year when it was voted the most creative start-up at the Web 2.0 summit in San Francisco.

The company offers access to 3GB of online storage as well as email and software applications including office applications from Zoho and Thinkfree. It competes against Google, which is increasingly offering a variety of applications on the Web. MokaFive and Mojopac also offer virtual PC products.

G.ho.st’s aim is to give you access to your desktop applications from any Web browser. However, it doesn’t offer standard business software, such as Microsoft Office, so it’s more useful for younger consumers who haven’t yet locked into specific applications.

The company is in open initial testing phase (”alpha”) and expects to offer a fuller “beta” version by Halloween.

[Update: The crowd has voted: Cleverset wins best in show. G.ho.st wins most creative idea. Spiceworks mostly likely to exit first.]

Here are the companies presenting at today’s Launchpad event at the Web 2.0 Summit in San Francisco: G.ho.st, Realius, Cleverset, Click Forensics, TripIt and Spiceworks.

The first three are new to VentureBeat, although two of those have been around for a while. We’ll update this post as we learn more about them. For now, here’s a summary:

G.ho.st — The company wants to provides every person with what it calls a free “virtual computer,” letting you log onto an account from any browser and so you can perform standard computing tasks. It offers you access to 3GB of online storage, email, and software applications including office applications from Zoho and Thinkfree. Here’s an intro to the offering. The company isn’t entirely new, having launched in April. It calls itself an operating system for the Web. Note: Google and many other companies may make this company redundant soon. Google offers a range of online applications, as well as online storage options. Moka5 and Mojopac, meanwhile, are two of several virtual VC companies taking this concept to a new level — with PCs in your pocket.
How will it make money? It wants to get revenue as an Amazon affiliate, in other words taking a cut if people say, buy a book from Amazon while looking at an ad on G.ho.st’s page (this is a longshot model, in our view, and needs work) The company is backed with $2 million from an undisclosed venture firm. Crowd reaction: Divided, though some people really liked it.

Realius — This is a fantasy real estate game site — The goal is to price the value of a home. The crowd of users get to decide the final price. The site plays on the U.S. obsession with homes and home prices. It uses real places, properties, people and other considerations that factor into home pricing, such as data about crime and schools. It offers expert advice to help you play the game. The company wants to target the $10 billion market in the real estate advertising market, only a small fraction of which is online. It launches in two weeks. Question: Are people really so obsessed that they’ll play this sort of game? We doubt there’s a significant market for this.

Cleverset — This is a strange one for Lauchpad, because Cleverset is five years old. But the Seattle company recently turned to develop personalized recommendation technology to consumers who are shopping on retail sites. It is a competitor to Aggregate Knowledge of Silicon Valley, and Wunderloop of Germany, among others. Cleverset records information about products in order to draw relations between them. The method goes beyond existing recommendation services that might, for instance, suggest different kinds of umbrellas if you’re looking to buy one. Instead, CleverSet might also suggest a wide-brimmed hat and a box of chamomile tea. All of the products it knows about can be mapped out and cross-referenced for interesting buyers.
Previously, it offered data-mining technology has been used by the U.S. military to track battlefield assets in Iraq. The National Institutes of Health to determine the likelihood that an elderly individual will stumble and fall. John Cook profiled CleverSet two years ago. Google’s VP of research, Peter Norvig and former Amazon.com chief scientist Andreas Weigend have been advisors. New today: It has 80 customers, and they’re seeing an average conversion rate increase of 20 percent and revenue increase of 30 percent. These are whopping numbers, comparable to Aggregate Knowledge’s claims. The company says it is now raising its first institutional venture capital round.

Spiceworks — The company relies on ads to offer IT management software. We covered it in August. It has plenty of competition, including Packettrap, announced yesterday, though none that we know want to rely entirely on ads. Here’s what was disclosed today: It now has more than 160,000 people using it, and claims it’s growing at 10 percent a month, making it the fastest growing company in IT management ever. Remarkable: The company has a 4 percent market share. It says it has London Symphony Orchestra as a customer. A bit of a surprise mention, because orchestras are notoriously cheap. Question: How are advertisers going to target the orchestra IT guys? Anyway, the crowd reaction to this company is very positive. The company got $8 million from Shasta and Austin, which is a bit of a coincidence considering that Click Forensics (see next entry) got funding from the same two venture firms. Other competitors are GroundWork OpenSource (see our coverage), Ipswitch, Kace Networks and SolarWinds.net.

Click Forensics — The San Antonio, Texas company reports on online click-fraud, has raised $5 million in a first round of financing earlier this year. See our coverage. It is backed by Austin Ventures and Shasta Ventures, and competes against companies like FraudWall, and ClickFacts (see coverage). Click-fraud is when someone clicks on an online page or advertisement purposefully to inflate revenue for the publisher of the site hosting the advertisement, or to make the advertiser pay more than they otherwise would have. Click Forensics is a spin out of Optimal iQ. From the presentation, nothing really new presented today.

TripIt– This is a travel plan organizer that we covered at the Techcrunch conference. Here’s what’s new today: It lets you email the service to request information, such as flight trip times. Convenient for mobile usage.

[Mark Coker and Chris Morrison contributed to this report.]