It's still possible in the case of Digital Ocean vs AWS: 5-10x price reduction, focus on a subset of core service. You still need to deliver friction-less service in the beginning, reliability and customer service eventually.
Not all will move from AWS, but the price saving is significant for small players who doesn't need the full suite of AWS.
DO just happens to be cheaper than AWS for certain use cases, but they didn't get there by out competing on price alone, it ticks a lot of other boxes: it's easier and simpler to understand for a new developer looking to get started, you can calculate and anticipate usage costs with ease, etc. It's not just a good copy with better pricing, it brings something to the table.
Exactly. DO launched with great pricing, SSDs, and an attractive UI. If they launched with only one of those three we wouldn't be talking about them today.
I don't view digital ocean like that at all. I would be using them even if the price was exactly the same. Digital ocean offers a competitive advantage over AWS, they have a simpler to use interface that focuses on getting one server setups working asap.
Some points, integrated console, root password reset, automatic backups. These are features that make them better than aws for a simple side project.
Digital Ocean started as a lower-priced clone of Linode (Vultr did the same later). They started with just a subset of the services (finally catching up now), but had good developer marketing and a lower starter rate.
It'll be interesting to see if they can continue to grow now that Linode have reduced prices to be lower than them. That's one big catch with coming in at a lower price, the incumbent probably has the scale to lower their prices below you, if they consider you a threat.
Not all will move from AWS, but the price saving is significant for small players who doesn't need the full suite of AWS.