Digital Ocean is a cloud computing company that's gaining real traction with small and medium businesses due to their managed services. Compared to AWS their simplicity and ease of use is what makes them very developer orientated. Remember, startups have limited resources and many time a dedicated site reliably engineer that can manage kubernetes and deployments on AWS is just too expensive to hire. This is where Digital Ocean comes in where for lower fees they offer managed services and end-to-end documentation so developers can focus most of their time on building products not configuring servers. I love the service ,and I'm looking to long term hold this as the total addressable market share is big and growing
I absolutely love D.O. as a developer, but I'm lukewarm on this IPO as an investor. Some things to note before investing:
- Their entire business is built on top of AWS. Without Amazon there is no DigitalOcean.
- Their low-priced, per-hour Droplet model is fantastic for hobbyists, but it's hard to imagine larger businesses wanting to get into that game.
- Servers, containers, dbs, volumes, networking and compute clusters must be managed by project owners/users. I don't believe they offer "serverless"/managed environments (I could be wrong though).
- While their tutorials and documentation are fantastic, it doesn't appear as though there is any advantage to being a paid subscriber to access them. This is great for the developer community at large, but it can be considered a missed opportunity to monetize.
- IMO, at 40/share is expensive and doesn't leave a lot of room for growth. I'll be watching this IPO closely but I expect a sell-off to a lower price point in the short-term.
I say all that having been a customer for many years. I'm really a huge fan, but I'm unconvinced that this stock has significant potential upside.
darkmode
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@Massachustocks, I agree with you on all points. I know one thing. I am coming from a development background as well and I remember loving to focus on building products and delivering customer value rather than spending ages configuring super scalable AWS solutions.
My speculation here is that Covid just pushed us into a new digital era that will create a lot of small businesses and startups online. These are the ones DOCN addresses and while the total market is huge already I think due to this there's more opportunity for growth. (over the long term). I could be wrong too and AWS Lightsail or something else could become the next best thing in this niche but as with everything in this space that's the risk we're taking
RonnieDubbs
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@Massachustocks, Digital Ocean has a dozen data centers. I've never heard this idea that its just resold AWS. They even had better spec hardware than EC2, I recall they had SSD storage a year before AWS and Google offered it. If its resold AWS this is news .. want to see something to back that up
darkmode
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@RonnieDubbs, from what I researched they seem to have had their own infrastructure. I'm not sure if that's the case now though
Massachustocks
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@RonnieDubbs, you may be right. For some reason I had that piece of info stuck in my brain. Maybe I confused it with another similar provider.
DigitalOcean (DO) doesn't resell AWS - at least officially, but they probably use some of the same infrastructure. That is to say that while they have their own equipment, at some point this is just going to generally be around the same kind-of quality, because the physically data centre is shared sometimes. For example, DO uses Interxion for their Frankfurt location (1), but AWS and Azure also have space in Interxion's Frankfurt data centre (2). Sure each provider can use their own server racks, and probably does, when a provider says they have their own data centre it doesn't necessarily mean they own their own building that contains JUST their equipment. I imagine this is what Mass meant, but I think this is kind-of a moot/off-topic point in the grand scale of the arguments he laid (which I also agree with).
- Their entire business is built on top of AWS. Without Amazon there is no DigitalOcean.
- Their low-priced, per-hour Droplet model is fantastic for hobbyists, but it's hard to imagine larger businesses wanting to get into that game.
- Servers, containers, dbs, volumes, networking and compute clusters must be managed by project owners/users. I don't believe they offer "serverless"/managed environments (I could be wrong though).
- While their tutorials and documentation are fantastic, it doesn't appear as though there is any advantage to being a paid subscriber to access them. This is great for the developer community at large, but it can be considered a missed opportunity to monetize.
- IMO, at 40/share is expensive and doesn't leave a lot of room for growth. I'll be watching this IPO closely but I expect a sell-off to a lower price point in the short-term.
I say all that having been a customer for many years. I'm really a huge fan, but I'm unconvinced that this stock has significant potential upside.