Rapidly growing DigitalOcean opens second NYC data center

DigitalOcean has amassed more than 35,000 customers since its launch in 2011, and has taken residency in Google's New York City facility

Continuing its rapid expansion, cloud service provider DigitalOcean has opened a second facility in the greater New York metropolitan area -- a data center located in Google's gargantuan Manhattan facility.

The additional location is another sign of the fast-growing success the company has had in offering a low-cost, easy-to-use IaaS (infrastructure as a service).

"There's a huge market for developers out there who just want a server online as fast as possible, and that is what DigitalOcean provides," said Mitch Wainer, a co-founder and the chief marketing officer of DigitalOcean.

Although Wainer disputed that DigitalOcean's first New York City-area data facility, actually located in northern New Jersey, ran out of space, new users who have signed up in the past month or so were instructed that they could not host their accounts there, and were instructed to choose DigitalOcean's outlets in Amsterdam or San Francisco.

In any case, the company's user base is growing quickly. The company has accrued more than 35,000 customers since its launch in 2011, and its revenue is increasing by about 30 percent to 50 percent per month, Wainer said.

Internet service market analysis firm Netcraft noted that in June 2013 DigitalOcean had more than 7,000 Web-facing servers, a dramatic increase from the prior December when Netcraft counted only 100 DigitalOcean Web-facing servers.

This newest set of servers is being colocated with the Telx data center company, which leases space in Google's 3 million-square-foot building. The building takes up an entire block on 8th Avenue, in the Chelsea district of Manhattan.

DigitalOcean was founded with the idea of offering cloud hosting that would be easier to set up than what was offered by the market leader, Amazon Web Services (AWS).

"There was a huge void in the market," Wainer said. Amazon and Rackspace are focused on enterprise-scaled businesses, but businesses in the lower-tier to midlevel market, which don't require advanced feature sets and don't have full engineering teams to manage infrastructure, are completely ignored, he said.

With its wide range of services, Amazon Web Services recently launched a series of tutorials that can guide users into setting up virtual machines.

In contrast, DigitalOcean keeps its deployment options relatively simple -- and inexpensive. Accounts are billed either on a monthly or an hourly basis. The least expensive "droplet," which is what DigitalOcean calls a virtual machine, costs US$5 a month, or about $0.007 cents per minute, and features a single CPU core between 2GHz and 3GHz, 512MB of working memory, 20GB of storage and 1 terabyte of data transfers.

In contrast, the least expensive month-to-month option on AWS, a T1.micro image running Linux, would run about $14.96 per month, and does not come with any storage.

The company claims that users can set up a droplet, or resize it to another pricing tier, in less than a minute. It offers virtual machine images running basic versions of either the Ubuntu, Debian, CentOS, Arch or Fedora Linux distributions.

The company is using a number of new technologies for competitive performance, including SSDs (solid state drives), which can boost I/O performance. For virtualization, DigitalOcean uses Red Hat's KVM hypervisor.

Just as Microsoft is doing with its Windows Azure service, DigitalOcean is initially pursuing the market of developers who need modestly priced machines to develop and test code.

Wainer points to the rapidly growing user base of GitHub, an online source-code repository, as proof of the potential size of the developer market. Founded in 2008, GitHub now hosts 7.7 million repositories from 3.3 million users.

"You can see from that market size alone, that this is a billion-dollar market opportunity," Wainer said.

While DigitalOcean has been courting the developer market, it is also suited for startup businesses as well, Wainer said. For instance, one startup using DigitalOcean is the RSS reader service NewsBlur, which has accrued a significant user base after Google shut down its own RSS reader.

Not that the company hasn't had a few bumps. Last month, one user found that the service was using identical SSH fingerprints for multiple Ubuntu droplets generated within a single account, which was a significant security vulnerability. The company has since fixed the problem.

"That's one of the things about being a startup -- you can't be perfect from the get-go," Wainer said, though adding, "Whenever there is an issue, we've been responsive."

DigitalOcean, which is based in New York City, now has 30 employees, though it is looking to hire network engineers and Linux system administrators. It is also expecting to get a significant investment from an outside party shortly, which will be used "to drive new features and acquire capacity in additional regions," Wainer said.

The company is planning to offer virtual private networking and object storage, similar to Amazon's Simple Storage Service (S3). It will also broaden its array of off-the-shelf virtual machines, including those with WordPress or other popular applications installed and ready for use.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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