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What stops Nvidia from cutting out the middlemen? They have the chips.

by actionfromafar 2y ago

tonyedgecombe 2y ago
There is probably more money to be made selling the tools.
- skyyler 2y ago
  I wonder if any shovel manufacturers invested into mining during the gold rush...
carbondating 2y ago
Then they would quickly discover that their moat isn't as strong as people think it is.
jeanlucas 2y ago
They kinda need to do it to justify their price
Findeton 2y ago
They would have to pay for them.
redrove 2y ago
There’s no need to cut them out, the symbiosis is working perfectly.
falcor84 2y ago
I don't think we can know about the long term, but I would assume that in the short-medium term, Nvidia can make a lot more money by continuing to sell its cards, where it's almost a monopoly, rather than competing in the overcrowded product space.
bojangleslover 2y ago
https://ngc.nvidia.com/ https://ngc.nvidia.com/
betimsl 2y ago
Given they are releasing models, whose to say that they don't have teams working -- not secretly -- just not in the open?
- weird-eye-issue 2y ago
  They literally have paid platforms to use their models.
m12k 2y ago
We don't yet know if there's actually any gold in the mine or not this time around, but we know for certain that there is money to be made selling pickaxes to the miners.
giacomoforte 2y ago
Huh? Their position in the market is much better than that of OpenAI and Co. Selling hardware and services is sure business. Training models is by contrast a risky business, and even if you attain SOTA, you cannot relax because your competitors will be on your tail. From a purely pragmatic perspective they also do not have the manpower to compete seriously in that space.
fbn79 2y ago
Doing so would mean incentivizing customers to seek alternative routes and migrate to competitor. Thus with the risk of losing the current moat.
brookst 2y ago
Nothing, in the same way that TSMC could cut Nvidia and OpenAI out. Vertical integration is incredibly powerful, but it requires mastery of the whole stack. Does Nvidia understand AI consumers the way OpenAI / Anthropocene does? Do they have the distribution channels? Can they operate services at that scale? If they can truly do it all and the middlemen don’t add any unique value, Nvidia (or TSMC) can and should make an integration play. TBB I’m skeptical though.
- Keyframe 2y ago
  > Nothing, in the same way that TSMC could cut Nvidia and OpenAI out. one thing is not like the other.
  - brookst 2y ago
    They’re exactly alike. The question is “why doesn’t an upstream supplier just use its own products and cut their customers out?” If you prefer, we can ask why TSMC doesn’t cut Nvidia out and just design AI chips. It gets to the same place: expertise as a supplier in one stage of a value chain is not fungible to all stages.
    - actionfromafar 2y ago
      But it's entirely possible to me that TSMC lacks some of the hardware knowledge that Nvidia has. A fab has a lot more than just TSMC equipment in, hasn't it?
    - Keyframe 2y ago
      I disagree. Nvidia designs chips and has demonstrated it can move between manufacturers (TSMC to Samsung). TSMC does not have know-how to design nvidia level of chips or develop supporting infrastructure (software and sales) because a) they have demonstrated they don't have any b) other players which do have capacity like AMD and Intel have also demonstrated they don't have any. Nvidia can move its vertical, TSMC not really. If you would've mentioned Apple for example, then maybe.. since that know-how is licensable to an extent (Arm).
segmondy 2y ago
They lose their customers. TSMC succeeded because they didn't compete with their customers. When they started, they focused on making chips for others. Any other company that that had a Fab could offer the same service at the same quality back then. Yet folks choose TSMC because there was no conflict of interest. If Nvidia starts competing with their customers, that conflict of interest will force some of those customers to look else where. I suspect Nvidia is releasing these things to add value to using their GPUs, kinda like offering free tools for your OS, notepad, calculator, browser, etc
Aeium 2y ago
middlemen to what?

What stops Nvidia from cutting out the middlemen? They have the chips.

tonyedgecombe 2y ago

There is probably more money to be made selling the tools.

skyyler 2y ago
I wonder if any shovel manufacturers invested into mining during the gold rush...

carbondating 2y ago

Then they would quickly discover that their moat isn't as strong as people think it is.

jeanlucas 2y ago

They kinda need to do it to justify their price

Findeton 2y ago

They would have to pay for them.

redrove 2y ago

There’s no need to cut them out, the symbiosis is working perfectly.

falcor84 2y ago

I don't think we can know about the long term, but I would assume that in the short-medium term, Nvidia can make a lot more money by continuing to sell its cards, where it's almost a monopoly, rather than competing in the overcrowded product space.

bojangleslover 2y ago

https://ngc.nvidia.com/ https://ngc.nvidia.com/

betimsl 2y ago

Given they are releasing models, whose to say that they don't have teams working -- not secretly -- just not in the open?

weird-eye-issue 2y ago
They literally have paid platforms to use their models.

m12k 2y ago

We don't yet know if there's actually any gold in the mine or not this time around, but we know for certain that there is money to be made selling pickaxes to the miners.

giacomoforte 2y ago

Huh? Their position in the market is much better than that of OpenAI and Co. Selling hardware and services is sure business. Training models is by contrast a risky business, and even if you attain SOTA, you cannot relax because your competitors will be on your tail. From a purely pragmatic perspective they also do not have the manpower to compete seriously in that space.

fbn79 2y ago

Doing so would mean incentivizing customers to seek alternative routes and migrate to competitor. Thus with the risk of losing the current moat.

brookst 2y ago

Nothing, in the same way that TSMC could cut Nvidia and OpenAI out. Vertical integration is incredibly powerful, but it requires mastery of the whole stack. Does Nvidia understand AI consumers the way OpenAI / Anthropocene does? Do they have the distribution channels? Can they operate services at that scale? If they can truly do it all and the middlemen don’t add any unique value, Nvidia (or TSMC) can and should make an integration play. TBB I’m skeptical though.

Keyframe 2y ago
> Nothing, in the same way that TSMC could cut Nvidia and OpenAI out. one thing is not like the other.
- brookst 2y ago
  They’re exactly alike. The question is “why doesn’t an upstream supplier just use its own products and cut their customers out?” If you prefer, we can ask why TSMC doesn’t cut Nvidia out and just design AI chips. It gets to the same place: expertise as a supplier in one stage of a value chain is not fungible to all stages.
  - actionfromafar 2y ago
    But it's entirely possible to me that TSMC lacks some of the hardware knowledge that Nvidia has. A fab has a lot more than just TSMC equipment in, hasn't it?
  - Keyframe 2y ago
    I disagree. Nvidia designs chips and has demonstrated it can move between manufacturers (TSMC to Samsung). TSMC does not have know-how to design nvidia level of chips or develop supporting infrastructure (software and sales) because a) they have demonstrated they don't have any b) other players which do have capacity like AMD and Intel have also demonstrated they don't have any. Nvidia can move its vertical, TSMC not really. If you would've mentioned Apple for example, then maybe.. since that know-how is licensable to an extent (Arm).

segmondy 2y ago

They lose their customers. TSMC succeeded because they didn't compete with their customers. When they started, they focused on making chips for others. Any other company that that had a Fab could offer the same service at the same quality back then. Yet folks choose TSMC because there was no conflict of interest. If Nvidia starts competing with their customers, that conflict of interest will force some of those customers to look else where. I suspect Nvidia is releasing these things to add value to using their GPUs, kinda like offering free tools for your OS, notepad, calculator, browser, etc

Aeium 2y ago

middlemen to what?