Cloud Competition: Is Digital Ocean The Next AWS?

Founded in 2012, Digital Ocean is a leading cloud service offering virtual private servers and managed databases.

Initially primarily focused on small independent developers and hobbyists, the company is quickly adding products such as managed Kubernetes and databases such as PostgreSQL that seem to directly compete with offerings from giants such as Amazon.com, Inc. (NASDAQ: AMZN) Web Services and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)'s Google Cloud Services.

The Competition

AWS dominates the cloud computing market, but other major players such as Microsoft Corporation (NASDAQ: MSFT)'s Azure and GCP are quickly gaining market share along with smaller offerings such as Digital Ocean, Linode and Vultr — and Amazon has taken notice.

AWS launched its Lightsail platform in 2016 to cater to the market that Digital Ocean serves, but it remains a small part of their business.

And while Digital Ocean has grown its business to more than $250 million in annual revenue, it's still primarily geared toward smaller organizations and developers that don’t require the advanced toolset and extensive platform features that AWS, GCP and Azure offer.

The Future

When Digital Ocean launched, it offered almost none of the services that the giants such as Amazon, Google and Microsoft provide such as network load balancing, managed databases and advanced network security.

Several years on, Digital Ocean is offering many of these things, with more features on the roadmap.

For enterprises, AWS is likely to continue to be the provider of choice, with Microsoft gaining quickly.

For many smaller organizations, appears poised to continue to dominate. If they continue to add features while maintaining the usability and reliability they've become known for, the company could very well be the provider for the next Snap Inc. (NYSE: SNAP) or Instagram.

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