Frost & Sullivan Insight
From an industry perspective, the core barrier to computing power leasing is the comprehensive ability to acquire resources, operate clusters, provide customer service, and manage funds. Enterprises do not need to build their own infrastructure; long-term leasing or hosting third-party resources is also feasible. The key lies in whether substantial control over resources is achieved, and whether responsibility for scheduling, operation, and SLA delivery is independently held, with primary responsibility for service quality. The industry distinguishes service providers from intermediaries mainly based on resource control rights and delivery responsibilities: service providers actually control resources and bear operational risks, with revenue coming from computing power and value-added services; the barriers lie in scale and technology. Intermediaries facilitate supply and demand to earn commissions, with low risk but thin profits, and barriers depend on channel efficiency. The fundamental difference between the two is whether they bear asset risks and add technical value.
An interview with Frost & Sullivan China's Senior Partner and Managing Director, Jia Pang, was conducted by a reporter from The Times Weekly regarding the entry barriers and business models of the computing power leasing market.
Q:From an industry perspective, what are the core barriers to computing power leasing? What key capabilities are required for an enterprise to enter the computing power leasing market?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
The core barrier to computing power leasing is whether a stable, controllable, and sustainable computing power supply capability can be established, mainly including four aspects:First, the ability to acquire and control computing power resources, enabling stable acquisition of key resources such as GPU servers, cabinets, networks, and electricity;Second, the ability to operate and deliver computing power resources, including the ability to pool resources, manage clusters, schedule operations, monitor and measure, and handle failures, ensuring service availability and SLA;Third, the ability to acquire and serve customers, continuously meeting customer needs and improving the utilization rate of computing power resources;Fourth, the ability to manage funds and assets, effectively managing risks such as resource procurement, equipment depreciation, idle resources, and technological iteration. Therefore, the competitive barriers in the industry mainly reflect the comprehensive ability of "resource acquisition and control + operation and delivery + customer service + fund and asset management".
Q:Do computing power leasing enterprises must have their own computing power infrastructure? If they mainly rely on third-party procurement or leasing of GPU resources and then provide services downstream, does this model have long-term commercial value? How is the scale barrier measured?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
Not necessarily. There are both heavy-asset models where enterprises purchase and build their own computing power infrastructure, and models that obtain computing power resources through long-term leasing, hosting, and cooperative procurement. Using third-party resources does not affect the enterprise's ability to engage in computing power leasing business. The key is whether stable and continuous control over relevant resources can be achieved, and whether responsibility for resource allocation, scheduling, pricing, billing, operation, and customer service is independently held, with responsibility for final delivery quality and SLA. If only short-term resource matching or reselling is done, the business stability and customer stickiness are usually limited.
Currently, there is no unified threshold for the number of GPUs or revenue scale in the industry. To determine whether an enterprise operates on a large scale, it is more appropriate to comprehensively evaluate indicators such as stable available GPUs or equivalent computing power scale, resource utilization rate, customer and contract stability, computing power service revenue, and renewal status, rather than solely measuring by the number of own GPUs.
Q:How does the industry define "computing power leasing service providers" and "computing power intermediaries/resource integrators"? What are the essential differences between the two in business models, profit margins, and competitive barriers?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
There is no unified legal classification in the industry. In practice, it can be distinguished mainly by resource control rights and final delivery responsibilities. Computing power leasing service providers usually have relatively stable control over relevant computing power resources and are responsible for resource allocation, scheduling, measurement and billing, operation, and customer service, bearing primary responsibility for service availability and SLA; computing power intermediaries or resource integrators mostly carry out functions such as supply and demand matching, resource matching, and transaction coordination, usually not continuously controlling underlying computing power resources, and their responsibility for final delivery is relatively limited.
In terms of business models, computing power leasing service providers mainly charge fees for computing power leasing and related operation, deployment, etc., while bearing risks such as resource lock-in, equipment depreciation or leasing, idle resources, and price fluctuations; intermediaries or resource integrators mainly earn income through commissions, service fees, or transaction price differences, with relatively low asset investment and resource risks. The former usually has higher revenue scale and single customer value, but profitability depends more on resource utilization rate, procurement costs, and pricing ability.
In terms of competitive barriers, computing power leasing service providers rely more on stable resource acquisition and control, cluster operation and scheduling, SLA delivery, customer base, and fund and asset management capabilities; intermediaries or resource integrators rely more on supplier and customer channels, supply and demand information coverage, and matching efficiency. The core difference between the two models is whether the enterprise has substantial control over computing power resources and bears primary operational and delivery responsibilities for customers.
*This interview was published in The Times Weekly. The author is Zhu Chengcheng. The original title was: Exclusive | Gaole Co., Ltd.'s 6.7 billion yuan computing power deal mystery: The registered address of its Harbin subsidiary is virtual, and more than half of the computing power business team joined less than 3 months ago?
