There are 4 avenues I think you can take in this market - 1) Price 2) Scalability/API (As in AWS style of instant spinup/spindown) 3) User experience for the

There are 4 avenues I think you can take in this market - 1) Price 2) Scalability/API (As in AWS style of instant spinup/spindown) 3) User experience for the dashboard and creation process 4) Configurability of your instances DO is currently fighting on 1 and 3 with a dash of two, which I think is very smart. They're not fighting with lowendbox providers for the lowest possible price, but they're competing with linode and AWS for relatively low cost, but with good stability and ease of use. You can't spin up/down quite as easily as amazon, but they're not targeting that exact use case anyway. I've moved a few things over to DO from linode and will continue to, because although performance is a bit less, the price points are far cheaper. I think there are a lot of people who use Linode/AWS for boxes that just hum along doing some simple server task(s) that would gladly move to DO for 1/4 of the price, as long as the stability/customer service is there. I read a rumor on a previous post that they were working on a way to customize an instances storage & RAM but at the current low price points, which I think would be huge.