Comment by aristofun
21 days ago
Because selling sophisticated shovels in the gold rush is much more profitable than finding gold and trying to make and then sell jewelry
21 days ago
Because selling sophisticated shovels in the gold rush is much more profitable than finding gold and trying to make and then sell jewelry
Traditionally yes. But not when your business model (if you can call it that) is selling shovels at a loss to wholesalers (cloud providers) who are making all of the money selling it to customers. AWS, GCP and Azure are all making a killing and the only reason they aren’t more profitable is because they can’t get enough chips.
Microsoft just said as much in their quarterly filings and unrelated to AI, Cook said they couldn’t meet all of the iPhone demand because of capacity issues at TSMC
yes, recursively selling tools for shovel makers can be even better :)
True
And to address the point about consulting, at the cloud providers themselves, the consulting departments were - even at AWS when I was there working at ProServe from 2020-2023 - considered a loss leader until 2022 to get companies to bring more work onto AWS. If you don’t take into account all of the credits that AWS gave companies toward ProServe, that divisions loss would be even higher.
Even at third party consulting companies a lot of the revenue comes from credits given to the customers from AWS and Microsoft. I purposefully didn’t say Azure. Microsoft has been playing this game for longer than Azure has been a thing.