Here's another excellent article by Paras Chopra of Visual Website Optimizer. He proposes and describes a "market-driven approach" to finding startup niches that make money:
Find a startup idea that: a) is already making money for someone else in a growing industry; b) interests you; c) aligns with your skill sets. Once you find such an idea, simply carve out a niche within the industry by a) addressing pains of an under-served segment within that industry; b) or, making it much easier to use than existing solutions; c) or, disrupting the market by making your product accessible to masses at a much affordable price. And once you dominate a particular niche, expand from your niche with your eyes set on the largest player in the market.
