I think what you describe is a likely end-state, and what large cloud providers will move to. The problem right now is that a setup like this isn't cheap; but i

I think what you describe is a likely end-state, and what large cloud providers will move to. The problem right now is that a setup like this isn't cheap; but its only expensive because economics of scale aren't behind it; that will change if demand for more isolated VMs increases. Essentially, a board with an array of "mini computers", 1-4 cores bussed to their own physically and logically isolated memory pool. Storage is oftentimes already networked in public cloud, and seemingly less susceptible to these kinds of attacks, so probably little change is necessary there. Its also likely we'll see vendors produce more "card computers", like the raspberry pi, but oriented at a server environment. At massive scale like what AWS runs at, these are less compelling, but they do have advantages; the biggest being, maintenance is a cinch, and the blast radius on one failing is isolated to just the workload on that card. I imagine these will be more interesting for current VPS providers like DigitalOcean, who also want to offer dedicated hosts with smaller core/memory counts. Even RPis today are super compelling; a $50 multicore computer that's easy to manufacture and replace, with density high enough to fit 100+ inside a 4U? Just need a bit more core perf and ARM adoption (though its easy to see Intel also hoping on this train with their long-term investment in pro/consumer NUCs). Writing is on the wall. The tipping point will be an industry thought leader saying, in effect, "you should be using dedicated hosts, because at this point physics is our enemy and we're not winning, by the way here's a new dedicated host instance type that's perfectly suited for horizontally scaled workloads, its 20% more expensive than virtual hosts of the same size, byeeee".