Think of cloud computing, and it’s likely you think first of the services offered by some of the giants of the technology world: Amazon Web Services and Microsoft’s Azure platform come to mind, and perhaps rival offerings from Google, Alibaba, and IBM.
Those companies dominate the cloud server world: Research firm Gartner found AWS and Azure together account for more than half of the infrastructure-as-a-service cloud market. Still, other, smaller providers have carved out their own place in the rapidly growing sector by paying close attention to their customer needs.
“The big hyperscale players are trying to do a little bit of everything for everyone, and they’re doing it at massive global scale,” says Dave Bartoletti, VP and principal analyst at research firm Forrester.
Smaller players have scored success by targeting enterprise companies seeking reliable places to host high-end software tools and startups looking for cheap, easy, and reliable solutions. On some level, every cloud infrastructure company is ultimately selling access to computers where customers can run programs and host files, but, by offering support and other services, they’re able to compete with those massive rivals despite their economies of scale.
“The best way to think about it is we empower and enable small teams,” says Shiven Ramji, VP of product at New York-based cloud provider DigitalOcean.
DigitalOcean is probably best known for its heavily customizable virtual machines called Droplets, which developers can use to host anything from web servers to back-end data crunching operations, though the company also offers other tools like scalable data storage. Since its 2012 launch, DigitalOcean has focused on targeting developers as its core customers, wooing them with easy-to-understand platform tutorials and simple and affordably priced services rather than a more formal sales approach targeted at their bosses.
“We have built this business with no sales team,” Ramji says. “Developers come to our website, they sign up with their credit card and get going.”
Other cloud providers have taken the opposite approach: Virtustream, founded in 2009 and now owned by Dell, was created specifically to focus on the needs of enterprise companies migrating complex, critical systems from their own data centers to cloud servers.
“We really cut our teeth as the cloud experts in SAP,” says Sean Jennings, a Virtustream cofounder and the company’s senior vice president of solutions architecture, referring to the German maker of enterprise business tools.
Virtustream offers service-level agreements guaranteeing system availability, with financial penalties if it fails to perform, and works closely with customers to migrate their existing software to the cloud, often over a period of months, and verify the systems continue to work as desired. Dedicated experts can help clients maximize their efficient use of the systems and even help diagnose performance issues. The goal is to give customers the confidence to move even vitally important systems off their own premises and into Virtustream’s cloud, he says.
“We’re finding, over time, fewer and fewer applications that need to be on prem,” he says.
Some customers of smaller cloud vendors are also specifically looking for a provider they know won’t compete with them. That’s particularly an issue with Amazon, experts say, since the company has rapidly expanded into so many fields, from online music and video streaming to developer source code management and email automation.
“We have so many companies coming to us that can’t be on Amazon,” says Russell Reeder, president and CEO of OVH US, the local subsidiary of French cloud company OVH.
OVH acquired VMWare’s vCloud Air cloud business last year and works with several corporate customers using VMWare’s virtual machine technology to manage their cloud servers. And in Europe, the company has a natural advantage with customers who want to use a cloud provider based on their own continent.
But even some other clients who already work with AWS, Azure, or IBM intentionally sign with OVH as a second service provider, at least in part to provide an alternative in the event of a disaster, Reeder says. And other customers, who are looking to build digital applications and services on top of OVH’s basic infrastructure, are happy to sign with a provider not so intent on entering so many disparate fields.
“The more they grow, and the more industries Amazon gets into, it actually helps us,” Reeder says.
ProfitBricks, a German cloud company, has focused on a similar market in the United States. Rather than sell directly to individual developers or even non-computing businesses as end users, the company sells its services in the U.S. exclusively through Denver-based Pax8, which itself only works with managed service providers maintaining software tools for their own customers.
Depending on the exact market, that could mean providing databases and back office tools for clients or even something more niche: One customer exclusively hosts computer-aided design software for labor unions, while others manage scientific and math computations, says Aaron Garza, Pax8’s VP of business development.
While the major players may continue to dominate the cloud industry, the overall digital infrastructure market is still growing at a rapid rate–global revenue was up 31% to $22.1 billion in 2016, according to the Gartner study–meaning there’s still plenty of room for other companies to get a piece of the action.
“It’s not anywhere near a monopoly yet,” says Bartoletti.