Loved the idea of blade servers, but they were targeted to people who needed very high compute in small footprints, and we both didn't have high compute requirements and were power/footprint constrained (we could get more power but cost/watt would go up because of cooling density).
The Twin^2 was nice because it amortized the cost of redundant power supplies over 4 machines, but didn't have the cost overhead of big backplanes or fancy layouts to get a lot of CPU+RAM in a small physical space.
Once populated a 4 node chassis was around $750/node including CPU and RAM and 2x SATA drives, it was within $100 of the price of a similar 1U server. We had around 10 cabinets in a data center when I left the company. It was, IMHO, a pretty good deal to get a dedicated box with 24x7 monitoring and sysadmin services including updates and backups at $150/mo.
It was implemented with User Mode Linux, a Linux kernel ported to run under Linux instead of ported to a bare machine. A crazy idea, but it worked REALLY well. I remember finishing up the sign-up and billing software on the plane on the way to US PyCon where we announced the service, though I don't remember the year.
Yep! That perfectly describes the few remaining people I know of that operate the things... and they're (slowly) seeing the light.
Oxide does get a bit of a pass on the vendor lock-in, though. I think you're buying from them _because_ they are the only vendor that has the security model and level of integration.
OTOH, much of the cost saving of less cabling was eaten up by the vendor charging higher prices for equipment like HCA's or switches compatible with the blade enclosure. And unless you went for a fully non-blocking IB fabric there were a bunch of unused IB switch ports.
Also, while the blade enclosure had this fancy web GUI for management, at scale we had built our OOB management automation around IPMI anyway, so this wasn't a feature worth much for us. If anything it was a bit of a chore, as in the cases when we needed to do something which IPMI wasn't capable of, there was an extra step of figuring out the node->chassis mapping to know which chassis to connect to, and then figuring out which blade in the chassis corresponded to the node in question.
For the next generation we got these "twin" systems manufactures had started coming out with, with 4 nodes in a 2U chassis. A bit more cabling than the blade systems, but in the end it was somewhat cheaper.
To me, from someone that has worked for orgs that either would have been or are customers of Oxide - You need to be thinking more about the complete package. You are thinking about a tiny piece.