In David Hahn’s own words, owning the tracks between San Francisco and Los Angeles gives you some pricing power due to limited options, similar to GPU data centers. However, the GPU data center market differs significantly. Unlike CPU clouds that formed an oligopoly, the GPU computing sector is becoming more of a commodity, with pricing based on usage per hour.
The increased popularity of AI and GPU computing has led to a flood of new entrants building dedicated AI clouds. This influx of competitors prevents any single company from establishing a monopoly or oligopoly in the market. In industries with high fixed costs and low marginal costs, such as airlines, competition often drives prices down to marginal cost levels.
As a result, GPU computing consumers are benefiting from the competitive landscape, as the market dynamics keep prices in check. With various providers vying for market share, customers have more choices and competitive pricing options. This trend highlights the importance of competition in fostering innovation and driving affordability in the GPU data center industry.
