Personal cloud computing will offer individuals and small businesses unlimited computing and network resources with no restrictions of hardware, operating systems, and access networks and without the hassle and cost of regular maintenance and security. However, moving these applications into the cloud can add a good bit of latency between an action (e.g., dragging a mouse) and the expected result (highlighted text). Our initial investigation found that user-acceptable latency depends on the application, but the most stringent games demand a roundtrip latency of less than 100 ms. Examining the entire action-response path, we identified the major contributors to latency and what can be done to minimize it for personal computer (PC) applications executed in the cloud. In this paper, we provide target latency values for each stage and suggestions on how to achieve this target. Special focus is given to video encoding since current encoders do not sufficiently support multiple streams and the low latency required for a cost-effective personal cloud computing service. © 2012 Alcatel-Lucent.