Netlify: The New Player in an Old Market

Business Mission

Netlify empowers developers and their teams to build and run websites more easily using a new approach to web hosting, comprising a robust yet flexible set of cloud-based tools. 

Thanks to its competitive solution, the business has earned itself a growing market share and reputation as a disruptive force in Platforms as a Service (PaaS), a market set to garner some 12 billion USD globally by 2022 with a forecast CAGR of 26% 2016-22 according to industry analysts

However with strong challenges ahead in an increasingly crowded US market, particularly at the SMB end of the spectrum, Netlify’s ability to highlight the breadth of its services and develop a competitive offering in more than one PaaS category is likely to determine its ultimate success over the next three years.

Business Benefits

Since its inception in 2014, Netlify’s fundamental new approach to powering the web has received major support from titans of the technology community, most notably the founders of Slack, Yelp and Figma during its recent Series B in 2018, which brings the company’s total funding to $44.1 million according to Crunchbase.  

Drawing on the way in which the advent of APIs has offered programmers a hitherto unparalleled level of flexibility, Netlify offers a flexible and scalable set of serverless web services. From hosting to a full range of backend services, cutting-edge technology seamlessly supports customers’ business objectives from the cloud. 

Netlify’s innovation means businesses can invest in developing the most valuable parts of their websites and services without unnecessary outlay, which is helpful for both bootstrapped Small to Medium-sized Enterprises (SMBs)  and lean-minded leaders at the enterprise level. 

Building, deploying and scaling websites becomes faster and simpler. As a result, Netlify’s product offering translates into a more nimble approach to digital without compromising deadlines, streamlining spend and manpower in the process.

Prognosis: Growing Fast but Hurdles Ahead

Netlify’s recent funding round can help the company invest in developing the right growth trajectory to disrupt a competitive market, most notably in North America, which is currently dominated by well-known and mostly US-based cloud services providers:


Entity HQ

Meanwhile demand for big data-led web solutions and growing telecoms adoption in Asia-Pacific as well as a surge in cloud-based service demand across European markets, where SMBs are particularly keen to streamline spend, bodes well for Netlify’s growth prospects over the medium term.  

  • 360 vendors
  • 21 market segments
  • 550 PaaS offerings
  • 48% of these are cloud-based 

However with growth in cloud-based services at the enterprise level, according to Gartner, on course to outpace that of offline services by 2020, competition, especially for system infrastructure, is getting fiercer by the minute. 

With many current cloud assets set to reach renewal over this timeframe in a segment of services with historically low churn rates, capturing the attention of customers at the right time will be critical for providers in this space. This is further compounded by the fact that 90% of global PaaS vendors currently only operate within a single market segment.

Intricately Analysis

Intricately has conducted an analysis of Netlify’s customer base to identify key trends and competitive insights to inform future growth strategy. 

This report analyzes data from 7,000,000 business’ spend on and usage of 21,000 unique cloud-based products around the globe between January 2018 to June 2019. 

Netlify Customer Profile

Our proprietary analysis reveals that Netlify has gained 4,985 customers as of June 2019, 70% of whom are startups comprising fewer than 100 employees. 



This indicates the company is doing well at acquiring these kinds of customers, though their constrained resources will limit the company’s growth without additional low-cost service lines or continued customer acquisition. 

In addition, Netlify’s customers typically manage a complex range of web services and solutions using a small number of providers:




Meanwhile only 5% of Netlify’s customer base currently run big data applications while 88% run application development. 

Geographic Footprint

42% of Netlify’s customers are based in EMEA with significant opportunities in APAC given the fast rate of growth for cloud based services in this region:


Sales Analysis




In the meantime, while Netlify’s top customers are also doing big things in the technology industry, on average the bulk of the company’s customers spend under 100,000 USD per month on cloud services. 


However despite this distribution of sales, Intricately has identified 156 companies within Netlify’s customer base with the potential to start spending over 100,000 USD per month on cloud services. 

This represents significant upsell revenue opportunity

Competitive Analysis

While the cloud-based services space is currently crowded, the performance of Netlify’s competitors varies significantly, which is a further sales opportunity. 


(Source: G2 CDN provider comparison and 2019 rankings)


However CDN77.com typically ranks highest in terms of overall performance by customers despite Netlify’s strong position, ranking second overall compared to 20 competitors.

In particular, CDN77.com has garnered high reviews particularly from SMBs for its thorough reporting and CMS integration features.  


Summary

Overall, our analysis reveals that while Netlify has established a strong position in the cloud services arena, particularly among SMBs in Europe, it may be missing out on valuable upsell opportunities. 

Balancing feature prioritization for its mid-tier and top grossing customers relative to its core customer base is the key to remaining competitive. 

Where We Sourced This Data

This data has been collected by Intricately’s proprietary sensor network, which monitors 8 million businesses’ usage of and spend on 21,000 cloud-based products and services around the globe.

Using its proprietary Global Sensor Network, deployed in more than 150 points of presence (PoPs), Intricately offers a comprehensive view into how organizations deploy, utilize, and invest in their digital products, applications, and infrastructure. 

Our data platform currently powers the go-to-market strategy for the world’s leading cloud service providers, including Verizon, Ericsson and AWS. These organizations rely on us to review market potential, segment, prioritize and engage with prospects at the right time.

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