Eric Sink has a good piece on how to come up with a new business idea. To summarize he makes the following points:

• Avoiding competition altogether is usually not a good strategy for getting a business going. The big problem with avoiding competition is that you are also avoiding customers.
• Money is made by beating competition, not by avoiding it.
• Look for someone who is serving real customers but not doing it very well. Find a way to do it better.
• The best approach is to find a competitor who is "big and dumb".
• Choose a "big and smart" or "small and smart" partner.
• Choose a fragmented market, that is a market shared by a reasonably large number of players, all of whom are functioning profitably. 
• In at least one important way, be different.

Okay, I've got to admit, he's building a .NET product, however he's redeemed by having his server product built using Java. Also, it's not too bad if at the same time he's taking revenue away from Microsoft.