[avnfish]

Great article. If this sustainable arbitrage exists from renting gpu time instead of selling and shipping gpus, why doesn't nvidia become a cloud provider itself?

[pjc50]

Why are Ford and Enterprise Rentacar different companies?

(ok, this does actually require a substantial amount of business theory to explain, but the shorthand is "core competence". And different risk profiles.)

[dazc]

Because Enterprise don't have to offer you a Ford? I'm in the UK and your chances of getting a Ford are slim to none.

[Der_Einzige]

If elon gets his way with his idiotic robotaxi idea, Tesla would be the equivalent of "nvidia being a cloud provider".

[htrp]

> why doesn't nvidia become a cloud provider itself?

DGX Cloud exists --- Nvidia sells the GPU to a hyperscaler and then builds a cloud on top of it and charges a markup.

Get's paid twice

[Jlagreen]

Simple, because Nvidia can charge twice for the same GPU that way.

Building a cloud data center is cost first and then you earn money by rent.

But if you seel the GPU to a CSP then the cloud provider has the cost and needs to rent while you made immediately money on the GPU.

But what about getting paid continously? Well simple, the end customer is then cloud but the cloud customer. So develop a SW for your GPU which then has a license to it. So the end cloud customer will pay rent to the cloud provider and license fee to the GPU maker. That's Nvidia's business model for now.

Eventually, the demand for GPU sales will drop but by that time, Nvidia will have a large install base of end customers using their enterprise SW. Then Nvidia will start becoming a competitior to CSPs and will easily do so because they can deploy data centers at cost and give better pricing. But today, Nvidia needs the CSPs to spread their SW. The primary goal is to reach all the end customer via DGX cloud and to create mindshare and moats. CSPs are only a means to an end of Nvidia as they could easily out compete them on AI compute if Nvidia wanted to to.

[andy_ppp]

Nvidia is fond of and successful at biting the hand that feeds it, so maybe...

[sevagh]

Elaborate?

[zdw]

Why doesn't every chip vendor pull a reverse-Apple and replace all the OEMs in the value chain?

They don't do this because they'll annoy all those folks they're trying to replace (see also 3dfx's move from selling chips to being a card vendor as precedent), and have to build a whole set of skills, relationships, and infrastructure they don't have, and there's risk involved in all of that.

See also why didn't nVidia (and any other GPU vendor) just mine cryptocurrency instead of selling cards during the last boom.

[dharmab]

They're hiring for roles that look like cloud and infrastructure engineers- although that may be for internal infrastructure for training their models.

[unstatusthequo]

GeForce NOW is kind of that.

[rybosworld]

It's not an impossibility that they could eventually do that - but it would be very difficult for them to do for a number of reasons that other folks have listed.

Bitmain, a manufacturer of bitcoin mining hardware, was using their machines to mine bitcoin before eventually shipping them to customers.

[latchkey]

This was a horrible business practice that they got called out heavily on. When I was mining Litecoin, we received a bunch of units that were obviously used. They would claim they were being "tested" first... uh huh.

[Retr0id]

It's not a risk-free investment, you're basically making a bet on future GPU demand. If demand dips, you're left with a bunch of hardware gathering dust (or no longer operating at a profit).

[mehulashah]

There’s speculation that they could become one should it be a sustainable for them to do so. I don’t think it will be.

[latchkey]

They've invested heavily in CoreWeave.