Yes they are using illumos/Solaris to host this but they don't sell on that, they sell on the functionality of this layer — allowing people to deploy to owned infra in a way that is similar to how they'd deploy to AWS or Azure. How much do you ever think about the system hosting your VM on those clouds? You think about your VMs, the API or web interface to deploy and configure, but not the host OS. With Oxide racks the customers are not maintaining the illumos substrate (as long as Oxide is around).

You could be right about demand, there is risk in a venture like this. But presumably the team thought about this - I think folks who worked at Sun, Oracle, Joyent, and Samsung and made SmartOS probably developed a decent sense of market demand, enough to make a convincing case to their funders.

I don't run on-prem clusters or clouds but know a couple people who do and, at large enough scale, it is a constant "fuck-shit-stack on top of itself" (to quote Reggie Watts). There is almost always something wrong and some people upset about it.

The promise of a fully integrated system (compute HW, network HW, all firmware/drivers written by experts using Rust wherever possible) that pays attention to optimizing all your OpEx metrics is a big deal.

It may take Oxide a couple more years to really break into the market in a big way, but if they can stick it out, they will do very well.

Also there are many situations where renting, for example a flat makes a lot of sense. And there are many situations where the financials and or enabled options of owning something make a lot of sense. Right now, the kind of experience you get with AWS and co. can only be rented, not bought. Some people want to buy houses instead of renting them.

At least with Oxide there is a glimmer of hope for a better future in this regard.

Could be! Seems too early to tell though, and remains to be seen whether it pencils. Which is the whole idea of starting a new venture, no?