According to DigitalOcean CEO, integrating Paperspace's infrastructure and tools with DigitalOcean's products will provide customers with easier testing, development, and deployment of AI applications. Additionally, Paperspace customers will benefit from DigitalOcean's cloud services, including databases, storage, app hosting, documentation, tutorials, and support.
According to DigitalOcean CEO Yancey Spruill, integrating Paperspace's infrastructure and tools with DigitalOcean's products will provide customers with easier testing, development, and deployment of AI applications. Additionally, Paperspace customers will benefit from DigitalOcean's cloud services, including databases, storage, app hosting, documentation, tutorials, and support.
Paperspace will initially continue to operate as a separate business unit within DigitalOcean, and there will be no immediate changes to the services offered to Paperspace customers.
Spruill expressed excitement about expanding the portfolio tailored to small- and medium-sized businesses (SMBs) and startups, providing simplified AI and machine learning offerings. This combined approach allows customers to focus more on building applications and growing their businesses while relying less on the underlying infrastructure.
Paperspace, founded in 2014 by Daniel Kobran and Dillon Erb, graduates of the University of Michigan, runs its own datacenters with custom-configured GPUs. Initially focusing on low-cost virtual machines for design, visualization, and gaming in the cloud, the company later shifted its focus to AI, launching a suite of tools for developing, training, deploying, and hosting AI models.
Prior to the acquisition, Paperspace raised $35 million from investors including Battery Ventures, Intel Capital, SineWave Ventures, and Sorenson Capital.
Erb sees the acquisition as a step towards offering comprehensive cloud CPU and GPU compute solutions to compete with other vendors in the public cloud market. The combined capabilities of DigitalOcean and Paperspace will enable a new class of customers, particularly those with budget constraints, to explore AI- and machine learning-driven applications such as generative media, large language models, recommendation engines, and image classifiers.
Erb expressed enthusiasm about joining forces with DigitalOcean, stating that the company's reputation for simplifying complex cloud technologies makes it the ideal partner to unlock the potential of AI and machine learning for developers and businesses.
The acquisition of Paperspace is DigitalOcean's first since 2022 when it acquired Pakistani cloud hosting service provider Cloudways for $350 million. This marks DigitalOcean's fourth acquisition since its initial public offering in 2021.
From an external perspective, the acquisition appears to be a strategic move for DigitalOcean, preventing it from falling behind in the race for cloud AI and machine learning solutions. While the company's revenue increased by 29.7% to $165.13 million in Q1 2023, earnings per share, return on equity, and net margin fell short of expectations.
Major cloud providers such as Microsoft, Amazon, and Google are increasingly leveraging generative AI to boost their revenues with significant success. A CNBC poll revealed that AI is now the primary investment focus for nearly 50% of top executives across various industries, underscoring the value of investing resources in this field.
Driven by the growing enthusiasm for AI, Gartner predicts a 21.7% increase in cloud spending in 2023, reaching nearly $600 billion this year compared to $491 billion in the previous year.