They offer their POWER machines as AIX and IBM i environments, as well as IBM z as LinuxONE VMs (under KVM instead of z/VM) with encryption everywhere for the security paranoid.

I suppose a z15 LinuxONE cloud offering would be attractive for them to offer because of all the built in observability, and also because those cores can be ridiculously oversubscribed before anyone notices.

As for pricing, they wouldn't need to pay their margins unless they eat into their other segments.

Running on third-party hardware is leveraging comparative advantage. Like Itanium, POWER is more expensive and there are very few reasons you would want to run on it. Definitely not a good fit for Cloud.

Full vertical integration isn't necessarily good business. Even Apple doesn't do its own manufacturing.

POWER is more expensive for us to buy, but IBM pays for it by the square inch of silicon. By that metric, it's probably very competitive with other server platforms. With OMI, they can also offer larger instances than anyone else while having more flexible tenant allocation because a single node can host a lot of tenants of different sizes up to the size of the full node, which could dwarf anything AWS and Azure can offer.

Sony PS/3 was a bold move though in that vain.