I still dont get it. If someone else's software is running the hardware, what difference does it make if its on-prem or offsite?
Our stack is open source.
> what difference does it make if its on-prem or offsite?
The difference is not where it runs, it's that you own our racks, rather than rent them. In the traditional cloud, you're renting. Other vendors who sell you hardware will still have you paying software licensing fees, so it never feels like you truly own it. We don't have any licensing fees.
Focusing on just this financial narrative you're weaving, what stops a bank from selling "virtual racks" that work financially the same as owning an Oxide rack, but it's just AWS?
$1m buys you 42U of, whatever. You're handed an AWS account you do not pay for, but it has the $1m worth of, whatever in it, in perpetuity. Maybe the bank even throws in some fakey market you can "part out" and "sell" your rack to, years later, at some "market price."
It seems like, the product - and maybe the experience of buying the product - is what is most important to Oxide. It's really interesting to me, because I cannot wrap my head around what this narrative is:
You guys are Apple of Racks. But minus the iPhone, because there is no monopoly here. So, Apple (Minus iPhone) of Racks. Is that it? It's the rest of their offerings, which without the iPhone monopoly effects, are Buying Experiences. It's like when people buy $10,000 Mac Studios to "run LLMs", which of course they are going to do like, zero to one times, because they are excited about the idea of the product. For the audience that needs to "run LLMs" they buy, whatever, or rent. But they don't buy Mac Studios. Just because people do something doesn't mean it makes sense.
Is the narrative, AWS Doesn't Make Sense? AWS makes a ton of sense, for basically everyone. Everybody uses it and pays up the wazoo for it. And there are good objective reasons AWS makes sense, at basically all levels. Who is fooled by, "AWS doesn't make sense?"
The problem with AWS isn't even that they are expensive. It's that Amazon is greedy. It could be cheaper, which is a different thing than being expensive. It matters because "AWS stays greedy longer than the average Y Combinator company stays private" is an interesting bet for an investor to take. They could decide to be less greedy at any time, and indeed, it did not take long after offerings of S3-like storage from others led them to simply reduce prices.
What that is telling me is, I could take $100m in funding, sell $1m "racks" of equivalent compute on the Rolls Royce of cloud infrastructure, making everything financially and legally and imaginarily the same as ownership, and then take a $300k loss, right? On each "rack", same as your loss? It's a money losing business, but here I am making the money losing very pure, very arby. Is this what you are saying customers want?
Clearly they want a physical rack. By all means, I can send them a big steel box that provides them that aesthetic experience. Cloudflare, Google, they do the physical version of this all the time: dumb, empty appliances that are totally redundant, because people ask for them. RudderStack, Weights & Biases, a bunch of companies come to mind doing the same thing in software, like so called Kubernetes Operators that literally just provision API keys but pretend to be running on your infrastructure. People ask for Kubernetes operators, they made them, but of course, they don't do anything. They are imaginarily Kubernetes operators.
The reason there are licensing fees and rentals and whatever is the enterprise sales pipeline, right? Enterprise sales is, give people want they ask for. People ask for a price that's below $X up front, so that's what IT vendors do, and then it turns out people are okay with some ongoing licensing fees, so there. That's what they do.
So what IS it?
I'm sure they'll find _some_ customers but they're going to be few and far between.
The only reasons to use Oxide racks are that you get an all-in-one solution and they don't charge you a subscription fee, you only pay upfront for the hardware once. But if this company goes public one day shareholders will surely push for a subscription based licensing model.
I have yet to see the benefit of "custom software" for "custom hardware". To me it looks like a liability, if Oxide stops to exist tomorrow you'll be left with a hunk of metal which is a dead end. The software being open source doesn't change that, if you have enough manpower to support such software on your own then you can surely support any other more flexible solution.
I'm struggling to understand what you're suggesting here, to be honest. First of all, banks don't sell cloud compute, so no bank is going to do that. Secondly, what does "work financially the same" mean? These are fundamentally different products, AWS is a service, Oxide is purchasing hardware that you then own.
> $1m buys you 42U of, whatever. You're handed an AWS account you do not pay for, but it has the $1m worth of, whatever in it, in perpetuity. Maybe the bank even throws in some fakey market you can "part out" and "sell" your rack to, years later, at some "market price."
What would be the advantage to anyone in this arrangement? Why not just have an AWS account in this case?
> "AWS stays greedy longer than the average Y Combinator company stays private"
Just to be clear, we are not a yc company. But beyond that:
> The problem with AWS isn't even that they are expensive. It's that Amazon is greedy. It could be cheaper, which is a different thing than being expensive.
It is true that if Amazon dropped prices, then the "rent vs buy" equation changes for some customers. But there always will be some people for whom it makes sense to own, and some people for whom it makes sense to buy.
> RudderStack, Weights & Biases
Neither of these companies seem to sell general cloud computing? They also don't sell hardware? These seem like completely different businesses.
> So what IS it?
We sell servers. Customers buy those servers, put them in a data center, and get a private cloud. That's the business. Other folks are doing similar sorts of things, but they all tend to be integrating parts from various vendors. We believe that our product is of a higher quality, because we built the whole thing, from the ground up. Hardware and software, working together. There are other things that matter as well, but that's the big picture.
You're telling me it's important to people to "own" instead of "rent." Well I can manufacture an "Own" out of a "Rent": I write up a contract for my customer that says "$1,000,000 for 100 EPYC servers", I ship an empty steel box, the end user gets an AWS account which they cannot add anything to, and it has 100 EPYC server metal instances in it. I pay the bills in that account. Okay? Now I have created "owning" out of renting.
If we pontificate on the objective value of owning versus renting, such as the ability to sell the hardware, I can manufacture that too: you might want to sell your empty steel box 5 years later, and I will buy it from you for $300,000. Or maybe the value of owning versus renting is that owning is "cheaper" than AWS. Okay, I'll sell the rack for $500,000 instead of $1,000,000. Do you see?
The important part of course is, I didn't have to make any racks. I didn't have to write any software. I give people something they really, really want, AWS, and I give it to them in the shape of an "Own." Of course, your "Own" and my "Own" are different, but whose "Own" is more different from a typical IT purchaser? You guys know 100x better than me.
I agree that it sounds stupid though. That's BAD. If it sounds stupid to manufacture an "Own" out of a "Rent", and it is an arbitrage, and it also is something people like, that is BAD for you. If it sounds like something banks should not be involved in, that is BAD. Banks are involved in extremely lucrative businesses!
> First of all, banks don't sell cloud compute, so no bank is going to do that.
Ha ha, but this is what you do! You might not be a bank, but you are a $100m bank account. You're more bank than I am today. And you are selling something - you know, you say you sell a rack, and you say, "that's the business," and there are people on this thread - and this is not at all an unorthodox opinion - who are saying, what is really the material difference between cloud and on-premises compute, when the interfaces between the two look so similar?
A huge difference is "Rent" versus "Own" which is why we are talking about it and why you brought it up. But I am showing you that you can manufacture an "Own" out of a "Rent," and it would be interesting to see, well, should I take $100m and spend $200m on R&D with it (ha ha), or should I take $100m and directly fuel it into a flywheel of reselling AWS into a shape that people like, which is "Own" instead of "Rent"?
> Hardware and software, working together.
See it's stuff like this that says to me, "Apple (Minus the iPhones) of Racks." That is really your thinking. It's about buying experiences. You guys are answering this question, clearly, in your own rhetoric. Because if it was really about "Own" versus "Rent," a bank could do it.
Selling a customer a contract for on-premises computing and giving them a fake metal box and SaaS is borderline unethical depending on the terms of said contract. I understand the sentiment of that point though. There are many reasons a customer chooses to own instead of rent. Legal requirements, financial incentives, and even control over performance to name a few.
On-premises computing was so good that the cloud providers packaged it up and sold it back to people at a premium that could only ever be rented. The finances of that model don't make sense to many businesses as they look to reignite their on-premises computing with the modernity of the cloud providers. That's where Oxide shines in my opinion- being able to have on-premises computing that combines the efficiencies of the hyper scalers with an API-driven approach to managing resources. We take that a step further by building hardware and software in-house for additional benefits such as power efficiency, control over the networking stack, additional telemetry, etc.
Nobody is saying anything about anything unethical... I am mocking the idea of needing the steel box, forget about the steel box.
It's just Amazon Reserved Instances, but with an indefinite period. Okay? Isn't that an attractive product?
Why am I talking about banks? Because maybe in Oxide's deck it says, "Amazon will NEVER do this. Amazon will NEVER sell indefinite reserved instances." Fine. Well a bank can simply pay spot prices and sell you an up front price, if you want. Okay? It's the same thing. It only matters what Amazon does when we're talking about $100m Series B, which is what this article is about! It's not about the technology.
> On-premises computing was so good that the cloud providers packaged it up and sold it back to people at a premium that could only ever be rented.
No... guys... AWS makes sense. It's not a premium "that could only ever be rented." There are a ton of much cheaper cloud providers. Amazon just happens to be selling the Rolls Royce of clouds. They have a ridiculous margin. Figma makes more profit for AWS each year than it will ever make for itself in its entire lifetime. "that could only ever be rented" is simply not true, they can afford to make all sorts of innovative pricing models, reserved instances being one of them.
Oxide just hasn't had to compete with "99 Year AWS Reserved Instances." But absolutely, positively, utterly nothing stops them from offering that. They already give you a massive, MASSIVE discount for 3 year reservations.
That said, obviously not having to deal with human beings managing hardware is valuable. It's the same shit as the difference between "AI" meaning a computer and overseas workforces. They might produce the same outputs for the same cost, but think deeply about yourself: how much are you willing to pay to deal with a computer instead of an IT tech? To avoid phone calls? To avoid doing things that might be faster, but are in person?
There is plenty of addressable market where a public cloud or even a colocation of hardware doesn't make sense for whatever bespoke reason.
I don't think their target customer is startups, and that's okay. You likely aren't their target customer. But they've identified a customer profile, and want to provide a hardware + software experience that hasn't been available to that customer before.
Amazon is expensive but not that expensive.
If I needed a generator to run a remote mining operation, and you just told me to just buy energy futures instead, we'd be having a silly discussion. Whether it makes sense for me to rent or buy the generator has more to do with governments, [,tax ]laws, and risks that ultimately manifest as cashflow decisions. You have some valid thread you are pulling on for what are the economics of general purpose compute and to whom, but your argument needs a lot more care to carefully define and make your case and why it is okay to dismiss the outlier cases for instance.
Exactly. Just because they are similar in some senses doesn't mean that they're fungible. Generator manufacturers still have a business even though you can purchase energy futures.
They are specifically going after features in a way that no other vendor is, with an extreme care of execution of their crafts at the highest level.
The problems oxide is solving for these customers is something Amazon has shown no interest in. Could they? Sure, they could do anything they put their pocket books to doing, but they haven't.
No, you haven’t. You didn’t deliver what was paid for. This wouldn’t be accepted.
> Do you see?
I’m sorry, but I do not. You’re not describing a business. You’re throwing some numbers out to describe a fraudulent enterprise.
> what is really the material difference between cloud and on-premises compute, when the interfaces between the two look so similar?
The material differences are around capex vs open spending, that you can locate your own hardware where you want to (which matters for things like “must be in a colo in southern Manhattan” (or any of the other reasons why physical location matters for latency reasons) or “must not leave the soil of $COUNTRY”), and the entirety of “TCO of owning is cheaper than renting for many workloads.” That’s just some of the larger obvious ones.
The stubbornness around interpreting this argument as negatively and as flawed as possible is a bad look.
Look, I'm not an expert in the field and I think you're making some kind of real point here. But for many organizations, there is no acceptable substitute to physical possession of the hardware, and sometimes even running it in an airgapped environment. You can synthesize a financial instrument of some kind, maybe, but it appearing the same from a financial perspective isn't the same as actual possession.
> You guys just raised $100m, you should be able to engage over questions of arb or whatever, and just know this stuff, and be able to talk to bankers and talk like a banker.
Both Steve and I are mere software engineers :)
iphone is nice and upgrade from commodities phone and I have one, but I wouldn't care much if my fridge has sleek UI because I just need it to be a fridge.
Because data must be on-prem, banks are stuck in legacy infra paradigms. The whole org suffers, innovation is stiffled, yada yada…
An on-prem cloud product (hardware+software) is a game changer for these companies, IMO.
My question to oxide: how easy is to integrate external hardware into the cloud? For example: bunch of GPUs or a bunch of next-gen hardware like SambaNova.
Oxide has been remarkably transparent about the development and architecture of critical system components. We can only hope they succeed and inspire others to follow their transparency lead.
https://www.illumos.org/docs/about/who/
(Listing all projects using ZFS or DTrace as "who uses Illumos" is cheating.)
I absolutely do not have a Solaris/illumos background! The first time I ever sshed into an illumos machine was my first day on the job.
That said, Illumos is influential as an organ donor to many others. There are a number of awesome technologies in it.
Latest one still in my to-read pile: https://lwn.net/Articles/1022920/
Or do you mean PC as in rackmounted servers? If that's what you meant, PC is a very poor word for it. That's kind of the point Oxide made from the beginning. Why are you running server workloads on a PC with a funny shape? Why do you need 84 power supplies (2/shelf) in your rack? Why do you need any keyboard or graphics controllers? Why don't you design for purpose a rack-sized server?
Or did you mean exactly what you wrote: "a PC"? You only need one server, not a whole rack's worth? Again, that is not the market Oxide is targeting.
Or you need to be able to run "dynamic workloads" that could require 40-4000 CPUs? You need hypervisors and orchestration, etc.? And you don't want them to be Solaris, or to run on Solaris? And you know all about Hubris and you don't want that either? But you think it would be nice if they weren't Linux? Maybe if they were modern microkernels written in something like Rust? But not the Hubris microkernel written in Rust?
I'm going to have to take you at your word. Your needs are "a bit of a different world" than Oxide fits.
But it's pretty cool that you still got some friendly personal attention from two big-name Oxide employees who seem willing to try to help you if they can. If you ever do find yourself in a world that aligns with theirs it appears that they are willing to try to accommodate you.
When I say PC I mean the large ecosystem of compatible performant hardware that exist out there, as opposed to e.g. RISC-V at this stage.