NeoCloud offered what the giants couldnโt, i.e.,
โฌฉSpeed.
โฌฉFlexibility.
โฌฉLower costs (up to 85% less).
But a new McKinsey & Company analysis suggests the easy wins are over & the โBare Metalโ model is becoming a trap.
๐๐ก๐ ๐๐๐๐ฅ๐ข๐ญ๐ฒ ๐๐ก๐๐๐ค
โฌฉMargins are razor-thin
โคท Real profits after costs can be as low as 14-16%.
โฌฉDepreciation is brutal
โคท The value of a GPU fleet can drop by 50% in just five years.
โฌฉThe Paradox.
โคท To survive, they must move โup the stackโ into software and services.
โคท But doing so puts them in a direct war with their biggest customers: The Hyperscalers.
โฆ๏ธThe path forward isnโt volume.
โ
Its value.
โฌฉSovereign Compute โ Managing sensitive, local data.
โฌฉSpecialisation โ Niche workloads like ultra-low latency inference.
โฌฉStart-up Symbiosis โ Embedding deeply with the next generation of AI giants.
โ Hardware gets you in the game.
โ Itโs the Software that keeps you there.
Differentiation is the new scale.
Whatโs your take?
Will NeoClouds evolve into specialised powerhouses or fade like the Cloud 1.0 startups?