What PRISM effect? DigitalOcean’s cloud passes 500,000 virtual-server mark (exclusive)

The press has been quick to play up pundits’ predictions of PRISM’s walloping of the cloud-computing industry. But new evidence suggests the fallout might not be as pervasive as it might seem.

DigitalOcean, an Infrastructure-as-a-Service (IaaS) provider based in New York, is reporting that it has deployed more than 500,000 virtual servers, or “droplets” in company parlance. The number was at 514,558 on Monday, running on about 5,000 physical servers, said Ben Uretsky, DigitalOcean’s chief executive and a cofounder.

The company has come a long way even since January, when it had 15,637 virtual servers, according to internal figures it shared with VentureBeat. And the company now boasts more than 50,000 customers and picks up 600 new ones each day, Uretsky said.

“We feel very confident that the model we created works,” he said.

Don’t get the wrong idea, though. DigitalOcean isn’t among the top cloud providers.

It’s infrastructure footprint is tiny in comparison with those of Microsoft (1 million physical servers), Google (bigger than Microsoft according to Microsoft chief executive Steve Ballmer’s recent comments), Amazon (“a little bit smaller” than Microsoft, Ballmer said), and Rackspace (98,884 servers deployed as of June 30, according to the company’s latest quarterly filing to the Securities and Exchange Commission).

That’s OK, because even small-scale growth is still growth. You’ve got to start from somewhere. At this point, Uretsky isn’t trying to chase enterprise accounts. He’s focused on developers above all else. And indeed, more are signing up for DigitalOcean’s brand of shared infrastructure backed by fast-acting solid-state storage, starting at $5 per month.

And this despite the much cited cloud heebie-jeebies companies are supposed to be feeling in the wake of reports on the National Security Agency’s PRISM program, which one-time NSA contractor Edward Snowden has been leaking in cooperation with various media outlets this year.

“I have not heard of any direct impact for U.S. businesses from the people that I speak with, nor have we seen a direct impact in our business in relation to that security incident,” Uretsky said. “So it’s certainly, I think, at the top of people’s minds, but it has not changed their buying behavior just yet.”

The company is riding high on $3.2 million in new venture funding from IA Ventures, CrunchFund, and TechStars. It recently added private networking features and seeks to add load balancing, object storage, content-delivery network capabilities and IPv6 support, as well as presence in Asia, Uretsky said.