1 00:00:00,000 --> 00:00:03,920 You might think the biggest breakup in tech history was Bill and Melinda Gates, 2 00:00:03,920 --> 00:00:09,280 but the one we just saw between EVGA and NVIDIA has to be in the top five. 3 00:00:09,280 --> 00:00:14,000 EVGA recently announced that they would completely stop producing and selling 4 00:00:14,000 --> 00:00:20,400 NVIDIA-based graphics cards. Huge news, considering EVGA owned 40% of the North American 5 00:00:20,400 --> 00:00:26,400 market share for NVIDIA GPUs. With graphics cards being as coveted and expensive as they are, 6 00:00:26,400 --> 00:00:33,760 why the heck did EVGA decide to kill this seemingly golden goose? I mean, do they not like money? 7 00:00:34,560 --> 00:00:38,960 We reached out to EVGA to get some more details, but unsurprisingly, they didn't want to give 8 00:00:38,960 --> 00:00:43,120 more details other than the public statements they've already made. But still, we'd like to 9 00:00:43,120 --> 00:00:48,000 thank Jacob Freeman for sending us a rejection message that was nicer than anything I've ever 10 00:00:48,000 --> 00:00:52,880 gotten on Tinder. I've never been on Tinder, but that's John speaking. But the good news is, 11 00:00:52,880 --> 00:00:56,560 we're not totally in the dark about what's going on, so let's get started by pointing out 12 00:00:56,560 --> 00:01:01,520 the graphics card business actually isn't as lucrative as you might think it is. Despite the 13 00:01:01,520 --> 00:01:06,560 high prices for premium models and the high demand we saw during the pandemic, AIB partners, 14 00:01:06,560 --> 00:01:12,160 like EVGA, ASUS, Gigabyte, and many others, are usually only running profit margins somewhere 15 00:01:12,160 --> 00:01:17,760 between 5 and 10% on their graphics cards. After all, they have to pay lots of money to 16 00:01:17,760 --> 00:01:23,120 NVIDIA and AMD for the GPUs themselves. And a recent report indicated that despite the fact 17 00:01:23,120 --> 00:01:28,240 that EVGA has long been considered part of the upper echelon of graphics cards manufacturers 18 00:01:28,240 --> 00:01:34,000 in terms of support and overall quality, their margins actually lagged behind most of their 19 00:01:34,000 --> 00:01:40,000 competitors because they outsourced much of the actual manufacturing, meaning EVGA's operations 20 00:01:40,000 --> 00:01:45,520 mostly consisted of just engineering the cards while others physically assembled them. And 21 00:01:45,600 --> 00:01:50,880 although outsourcing is usually associated with cutting costs, it appears that in this case, 22 00:01:50,880 --> 00:01:57,680 EVGA sacrificed money for convenience and scale. And remember how we just mentioned EVGA's support? 23 00:01:57,680 --> 00:02:02,960 The company was rather generous with its warranty and repair policies, which was great for consumers, 24 00:02:02,960 --> 00:02:09,040 but also likely cut into the company's already narrow margins even further, especially as they 25 00:02:09,040 --> 00:02:13,280 didn't sell at the same volumes as some of their competitors, as many of these other companies have 26 00:02:13,280 --> 00:02:19,920 a more global reach and also sell AMD Radeon based cards. So this at least partially explains why 27 00:02:19,920 --> 00:02:25,760 EVGA is getting out of the graphics card business entirely, but not about the reported specific 28 00:02:25,760 --> 00:02:31,520 beefs they had with NVIDIA as a partner. Consumers won't be strangers to how NVIDIA's pricing is 29 00:02:31,520 --> 00:02:37,760 famously hard to predict, with announcement day MSRP's often differing significantly from projections 30 00:02:37,760 --> 00:02:43,760 by the tech media. But it might come as a surprise that AIB partners also find out official pricing 31 00:02:43,760 --> 00:02:48,880 around the same time as you and me at home do. And by then, the cards are already in production 32 00:02:48,880 --> 00:02:53,840 without the AIB partner even knowing how much money they owe NVIDIA. Not to mention that NVIDIA is 33 00:02:53,840 --> 00:02:59,440 rather strict about designs it allows AIB partners to create. And while it may help protect stability 34 00:02:59,440 --> 00:03:03,920 and consistency across the product lineup, regardless of who you buy your graphics card from, 35 00:03:03,920 --> 00:03:09,280 and may stop AIB's from designing something overly exotic that ends up not working well and 36 00:03:09,280 --> 00:03:15,440 hurting NVIDIA's reputation, it also hamstrings the AIB's ability to innovate and set themselves 37 00:03:15,440 --> 00:03:20,880 apart from each other. So while both sides seem to have valid concerns, at the end of the day, 38 00:03:20,880 --> 00:03:27,040 a smaller company like EVGA was taking huge losses on higher-end cards, especially as they compete 39 00:03:27,040 --> 00:03:31,520 against NVIDIA's own Founders Edition cards, which are the cheapest on the market, and the 40 00:03:31,600 --> 00:03:36,320 models that consumers who simply want a GPU without extra bells and whistles and dragon 41 00:03:36,320 --> 00:03:41,520 decals will gravitate towards. Needless to say, the opaque pricing and the fact that they were 42 00:03:41,520 --> 00:03:48,080 getting undercut by NVIDIA itself left EVGA feeling more than a little miffed, and left them without 43 00:03:48,080 --> 00:03:52,720 much of a reason to carry on with their graphics card business in the wake of both the crypto crash 44 00:03:52,720 --> 00:03:59,200 and the higher production costs, and thus even thinner margins, of the new RTX 4000 series. 45 00:03:59,200 --> 00:04:04,160 Unlike many of their competitors, which make both NVIDIA and AMD-based graphics cards, 46 00:04:04,160 --> 00:04:09,520 EVGA exclusively made GeForce products, so they don't have a radion lineup to fall back on, 47 00:04:09,520 --> 00:04:13,680 and even if they did, they'd still be facing the same issues we mentioned in the first half of 48 00:04:13,680 --> 00:04:18,640 this video. The good news for EVGA is that they have a successful power supply business that has 49 00:04:18,640 --> 00:04:23,840 much higher profit margins that the company reportedly plans to soldier on with. But if you 50 00:04:23,840 --> 00:04:29,680 had your heart set on a FTW love lace card for your next gaming rig, sadly, you're just gonna 51 00:04:29,680 --> 00:04:34,880 have to take the L. Hey, and thanks to you for taking this train all the way to the end of the 52 00:04:34,880 --> 00:04:39,120 video, the video train. Like the video if you liked it, dislike it if you disliked it, check out 53 00:04:39,120 --> 00:04:42,640 our other videos, comment below with video suggestions, and don't forget to subscribe 54 00:04:42,640 --> 00:04:47,600 and follow. I've talked to you so much about this, and frankly, I'm sick of it.