An interesting summary at Barrons of a VC panel at the Software 2007 conference. The worry is that big companies like MSFT, ORCL and IBM have so much CIO mindshare that there's none left for the little guys; the richer get richer and the poor (or small) are shut out.
Even the SaaS players trailing behind Salesforce are tiny; as Ted Schlein says “They are all gnats. They are all tiny. Not one would be a small division in one of these larger software companies.” (Actually, even Salesforce's (Q407) revenue is just $144M; our Larry could buy it from petty cash...).