The pricing isn't necessarily much higher. The pricing is set up to amortize the cost of running things over a period of time. If you're only going to use it for a short time, you pay more than someone who commits to a 3 year contract.
It also isn't just the hardware capex, it is everything involved under the covers. Market pricing also factors into that as well. This is something I've struggled with myself quite a bit. I know all of my costs and what I'd like to charge, but because my offering is so brand new, until my competitors announced their pricing, I wasn't sure what the market would tolerate.
Selling hardware directly is hard for exactly what you state though. Service contracts are a pain in the butt. All of this latest AI hardware has high rates of failures too. Up until recently with AMD coming to market with a great offering, the only thing people want any sort of quantity on are nvidia products. Groq probably realized that people buying 1-2 cards at a time, wasn't going to be profitable.
> Groq probably realized that people buying 1-2 cards at a time, wasn't going to be profitable
Yep! And if would have bogged them down by slowing down R&D cycles and even fulfilling orders as they obviously are not placing orders the same size as Nvidia or AMD.
I wonder what this portends for SambaNova and other similar vendors as well.
It also isn't just the hardware capex, it is everything involved under the covers. Market pricing also factors into that as well. This is something I've struggled with myself quite a bit. I know all of my costs and what I'd like to charge, but because my offering is so brand new, until my competitors announced their pricing, I wasn't sure what the market would tolerate.
Selling hardware directly is hard for exactly what you state though. Service contracts are a pain in the butt. All of this latest AI hardware has high rates of failures too. Up until recently with AMD coming to market with a great offering, the only thing people want any sort of quantity on are nvidia products. Groq probably realized that people buying 1-2 cards at a time, wasn't going to be profitable.