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Groq's Business Model Part 2
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Groq's Business Model Part 2

Managed Services, Colocation, Traditional Hardware Sales.

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Austin Lyons
Oct 21, 2024
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Groq's Business Model Part 2
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Last week, we examined Groq’s inference API business. Let’s continue expanding on Groq’s “ramp to hardware” business model.

Managed Hardware 

Recall how Groq’s Mark Heaps framed the managed hardware offering.

Then we start getting some customers who say, “We want a cloud-like instance, but for compliance reasons and other things, we need to have a dedicated provisioned system. But you guys manage it.” And we can do that. That's the next stage of moving up the ramp. 

Mark didn’t mention the pricing model, but this sounds similar to AWS EC2 Dedicated Hosts, where customers choose the dedicated compute they need and pay accordingly. For example, the EC2 pricing page shows 30-40% discounts for 1-year reservations compared to the equivalent hourly pricing, and 3-year reservations can save 50-60%. If the customer pays upfront, savings can reach as high as 70%.

Leasing is an appropriate mental model for this managed yet dedicated hardware. The customer pays for exclusive access but does not own …

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