But why sell hardware then? From customer perspective, wouldn't buying racks from Dell or HP be more stable procurement-wise and equally manageable by the excellent Oxide software stack (if such thing exists)?
This is akin to asking why not install iOS on a lower cost, easily available Android phone. Much of the benefit is only available if one provider designs the hardware and software as one. The complete elimination of the security-nightmare UEFI layer is a good example.
It’s not like they get magical components or firmware. All it takes is supporting specific rack configurations from top vendors. Or, if you want more lockdown, reselling custom-ordered racks with your software on top.
they do get custom firmware, for example there is no hardware vendor in the world that can supply a server that could start an AMD CPU without a UEFI the way we require. Supporting the existing hardware out there would necessitate worsening the Oxide software to compensate. Trust me, if this were possible to achieve on commodity hardware, it would be done on commodity hardware. Same reason AWS, GCP, and Azure make their own hardware- there are advancements that can't be made on commodity gear. The cabled backplane is another good example, it can't be done on commodity gear and eliminates days of setup and manual servicing/configuration errors.
They do get magical components and firmware, they make them
Something that comes up frequently on their podcast - often in passing, I'm not sure I remember a specific episode to refer you to - is the woes of trying to support/debug commodity hardware. Think waiting for Dell to get back to your support ticket about a BIOS issue. Or being told "well you're the only person with this problem, so it must be your fault sorry!" This seems to come especially from Bryan's experience at Joyent. The way they describe "Oxide value" is being able to own as much of the stack as possible so that they can debug things down to the lowest level possible.