DigitalOcean continues to grow steadily

DigitalOcean ( today announced that it is now the second largest web hosting company, according to NetCraft.

This is quite impressive in a world where Amazon Web Services continues to dominate the industry, with over ten times the running capacity of all the other competitors combined, according to the latest Gartner Magic Quadrant. And also a very fast and recent story – in December 2012, DigitalOcean barely had a few hundred web-facing servers.

Observers will point to the simple user interface, developer focus, low pricing as various reasons why DigitalOcean is making such progress.

Indeed, I would argue that it’s all of these things together, building a very clear customer segment focus and strategy. “Strategy is not complex, but it is hard”, as Roger Martin and A.G. Lafley say in “Playing to Win: How Strategy Really Works”.

I see DigitalOcean as a great example of a company in a complex ecosystem who has made very deliberate choices to the absolute best in a market segment. They are very clear right on their home page: “Simple cloud hosting, built for developers.” Might be obvious, but it already has three important elements:

  1. Who they do it for – developers (as opposed to enterprise, or operators).
  2. What they do – cloud hosting. ¬†Interesting that they would use the word “hosting”, but also telling. They are focusing on the simpler end of websites and web applications,¬†where a single server is often sufficient.
  3. How they do it – simple. A significant portion of their efforts has gone to keeping the interface as intuitive as possible, always asking how they can make it simpler for developers to get to work. Multiple predefined templates enable developers to launch particular frameworks (from the common LAMP to many other more modern combinations) at the click of a button.

Digital Ocean is still far from AWS (the number one in the NetCraft survey) but its goal may not be to catch AWS. It has chosen its turf, and defined where it would play, and how it would win. And the results speak for themselves.