With the changes in the global economic environment and the rising cost of business operations, all enterprises are looking for strategies to reduce costs and increase efficiency. In this context, cloud services, as an important part of the operating costs of Internet companies, have naturally become an important area for savings. The traditional cloud service market is dominated by a few large cloud service providers, but with the diversification of enterprise needs and the need for cost control, overseas cloud service providers such as DigitalOcean are starting to stand out and provide more flexible and cost-effective cloud service solutions.
According to DigitalOcean's 2023 financial report, the company's net profit for fiscal year 2023 was 19$41 million, an increase of 179 year-over-year94%；The operating income was 6$9.3 billion, an increase of 2.0 billion year-over-year31%。In this way, the growth rate of revenue growth has exceeded that of overseas leading cloud vendors. The most interesting thing is that DigitalOcean serves small and medium-sized enterprises, as well as individual developers, with a total of 600,000 customers. Although they don't have any operations in China, there are a number of Chinese developers who are using their cloud services. Why is this company favored by small and medium-sized enterprises? What's the secret to revenue growth? What does that mean for Chinese developers?
Who is DigitalOcean?
Founded in 2012, DigitalOcean was founded with the goal of providing developers with a simple, easy-to-use, and high-performance cloud service platform. At that time, cloud services on the market were generally considered complex and expensive, and the founders of DigitalOcean saw a need for a simple, efficient, and transparent cloud service platform. Therefore, DigitalOcean's vision is to eliminate the complexity of cloud computing by providing simplified services and an intuitive user interface, while remaining cost-effective.
However, DigitalOcean doesn't compromise on the quality of service because of the pursuit of "low prices", quite the opposite. DigitalOcean also prides itself on "providing only high-performance services". All disk drives are SSDs with a network speed of 1Gbps. According to third-party reviews, droplets (DigitalOcean's virtual machine product) take only 55 seconds to start, compared to 1-3 minutes for other large cloud providers. Standalone performance testing places DigitalOcean nodes in or near the top of the performance test, much higher than AWS. Of course, this is a recent test, and we don't know how well DigitalOcean performed when it was first created.
So, "low, high-performance, and easy to use", DigitalOcean launched their virtual machine product droplet, and began its journey to the cloud.
Unlike other cloud service providers, you will see overwhelming advertisements in all kinds of **. (I'm sure you've all seen billboards with a few clouds at airports in China.) DigitalOcean uses rich content as its low-cost customer acquisition channel. These include development tutorials, business advice, technical science, developer practices, and more. These contents help users to register, develop, and complete the product launch by themselves, that is, customers can almost complete it independently according to the content on the ** from entering the door to completing the payment, which is a typical "customer self-service" model. According to a report on Nasdaq**, DigitalOcean brought 9 million unique visitors to the website through a large amount of content in the first quarter of 2022. In the first three quarters of 2022, DigitalOcean grew 34% year-over-year, while marketing expenses accounted for only 14% of its revenue during that period. So far, the majority of DigitalOcean's users have been acquired through its content marketing. At the same time, the lower marketing cost also allows it to spend money on the tip of the knife, such as product research and development and business expansion.
DigitalOcean's initial product was only droplet virtual machines. With the continuous development of the company and the increase in user demand, DigitalOcean has gradually launched a series of products such as floating IP, Kubernete, application hosting, database, etc. At the same time, they gradually built 15 distributed data centers in 9 regions around the world.
DigitalOcean has maintained revenue growth of more than 20% per year, which not only highlights the success of its business model, but also demonstrates the high demand for cost-effective cloud solutions. In the current economic climate, startups, small and medium-sized businesses, and large enterprises are actively looking for ways to optimize their cloud infrastructure spending.
DigitalOcean's all-staff remote work model, which allows its employees to be distributed in various time zones around the world, not only breaks through traditional geographical restrictions, accelerates the company's global expansion, but also enables the company to serve customers in different parts of the world at a lower cost. DigitalOcean's success has shown that the company is still able to maintain efficient business operations and achieve rapid growth despite the lack of traditional office space.
In March 2021, DigitalOcean was successfully listed on the New York Stock Exchange, which signifies the company's maturity and readiness to meet greater market challenges. The listing provides DigitalOcean with additional capital to support its global expansion plans and continued technological innovation.
After the listing, DigitalOcean acquired CloudWay, a cloud hosting service provider, in 2022, and **Space, a cloud GPU server rental platform focusing on AI model training, in 2023 to expand DigitalOcean's business in the cloud computing field. Currently, the solutions that DigitalOcean can offer to small and medium-sized businesses include:
Droplets: Linux virtual machines that allow users to choose CPU plans, RAM, SSD storage, and transfer quotas.
Kubernetes: Provides a managed Kubernetes service that provides uptime, scalability, and portability for containerized applications through a free Control Plane.
Functions: A serverless solution that runs on demand** and scales instantly without having to manage servers.
App Platform: A fully managed platform for building, deploying, and scaling applications quickly without worrying about infrastructure.
Cloudways: Cloud hosting service that troubleshoots around the clock.
Spaces Object Storage: Use S3-compatible tools to store and access large amounts of data, independent of compute servers.
Block storage: Add block storage volumes as needed to expand the capacity of the computing server.
Load Balancer: Easily scale applications by directing traffic to available resources with load balancing.
DDoS Protection: Defend against network DDoS attacks with always** and automated mitigation to keep your applications up and running.
Space: A GPU cloud service designed to provide accelerated computing power for AI large language models.
Managed Kafka: Enables users to handle growing data volumes and traffic, improves cluster reliability, and supports scale-out of clusters.
According to an estimate by an investment institution, small and medium-sized enterprises with fewer than 500 employees are expected to spend $144.6 billion on cloud infrastructure-as-a-service and platform-as-a-service by 2025. Some of this spending will certainly go to large cloud platforms, but DigitalOcean is still likely to be the preferred choice for most of these businesses.
So why do SMEs favor it?
First, DigitalOcean has an extremely developer-friendly community that provides a clean user interface, APIs, and extensive documentation that allow small and medium-sized businesses to quickly deploy and manage applications. Even a novice programmer like the author can follow the tutorial to configure the server for his own **. And when you have a question, you can also get the answer in its Q&A community. Gim Wee, CTO of Sans**, has said, "DigitalOcean makes it easy for our non-DevOps technologists to set up droplets and configure the network. "This highly friendly community has greatly lowered the barrier to entry for new users and improved the developer experience. This is significant in the context of every business seeking to reduce costs and increase efficiency.
In addition to APIs, documentation, content, etc., DigitalOcean also provides a large number of one-click plugins and functional modules to further simplify the deployment and development process for developers. There are more than 290 plug-ins and functional modules, including such as MERN (MongoDB, Expressjs、react.js and nodejs）、mean（mongodb、express.js、angular.js and nodeJS) and Farm (FastAPI, React, and MongoDB), as well as functional modules for different application scenarios such as e-commerce, games, and email services.
In addition, there is another reason why SMEs prefer to choose DigitalOcean over large vendors – billing. If you've used cloud services from some of the major vendors, you should spend a lot of time each year interpreting those bills. Due to the complexity of their service configuration and pricing logic, you may add a fee for each configuration modification. This is undoubtedly a challenge to reduce costs and increase efficiency. However, DigitalOcean's affordable pricing and transparent billing logic are ideal for small and medium-sized businesses on a budget. A clear pricing structure also eliminates possible unexpected expenses, making it easier to manage budgets and achieve the goal of controlling costs and improving R&D efficiency. Ankit Aggarwal, CEO and CTO of Eglogics, commented: "Billing calculations are simple. We can easily** and figure out what we're paying. In AWS, this can be hard to figure out, especially after multiple regional deployments. But with DigitalOcean, as the company's CEO and CTO, I can easily understand what services I'm using, and how I can reasonably control my spending. ”
The key to DigitalOcean's ability to provide low-cost services is its high degree of automation and streamlined product design. By streamlining redundancy and dramatically reducing product pricing, the company shifted the power to decide on cost savings to customers. At the same time, it reduces complexity and effectively reduces support costs. This combination of high efficiency and low cost has formed a significant cost advantage for DigitalOcean.
According to Derek, Solution Architect at Zhuopu Cloud Technology, "Users can typically reduce costs by 50% to 70% after migrating their services from first-tier cloud providers such as AWS and GCP to DigitalOcean. This significant cost savings are largely due to DigitalOcean's unique pricing structure. The total cost of cloud services usually consists of two parts: server costs and data transfer costs. DigitalOcean's pricing strategy includes free data outbound credits ranging from 500GB to 11TB per cloud server, while the pricing of its servers is generally more than 10% lower than that of other cloud service providers. In addition, DigitalOcean allows all servers under the same account to share a single traffic pool. For those enterprises with high traffic usage, data transfer fees are often the largest part of the total cost of cloud services, accounting for more than 50%. If these companies switch to DigitalOcean's pricing model, their data transfer costs will be significantly lower or closer to zero. ”
Can Chinese developers use it?
In the past two years, in China, "reducing costs and increasing efficiency" has become an unavoidable item in most corporate OKRs. Not only small and medium-sized enterprises, but also some large companies with overseas business are constantly looking for ways to reduce costs, and server cost control is also among them. Recently, it has been reported that leading companies such as SHEIN, Byte Overseas, and Xiaohongshu have adjusted their overseas cloud service providers, and the reason behind them must be inseparable from cost expenditure.
In this context, DigitalOcean is also likely to become an option for many small and medium-sized enterprises and even large companies, especially domestic enterprises with application overseas, cross-border e-commerce, programmatic advertising, or AI model training needs.
In China, AI Droplet, as the exclusive strategic partner of DigitalOcean, is responsible for providing localized services. This cooperation will not only help DigitalOcean better adapt to the needs of the Chinese market, but also find a win-win business model in the current complex international political environment. AI Droplet, the parent company of Zhuopu Cloud Technology, is the majority shareholder of DigitalOcean, which provides a solid foundation for the cooperation between the two parties and helps the two parties achieve synergies in terms of resource sharing and market expansion.
As enterprises' demand for cloud computing is segmented and cost pressures increase, the high-performance and low-cost services provided by overseas cloud service providers such as DigitalOcean will become more attractive. DigitalOcean is gradually expanding its share of the global cloud services market through its advantages in performance, performance and user experience, coupled with strategic cooperation with local partners. In the future, with the further development of cloud computing technology and changes in market demand, DigitalOcean is expected to continue to consolidate and expand its market position.