You might think the biggest breakup in Tech History was Bill
and Melinda Gates but the one we just saw between EVGA and Nvidia has to be in
the top five EVGA recently announced that they would completely stop producing
and selling NVidia-based graphics cards huge news considering EVGA owned 40
percent of the North American market share for NVIDIA GPUs with graphics cards
being as coveted and expensive as they are why the heck did EVGA decide to kill
this seemingly Golden Goose I mean do they not like money we reached out to
EVGA to get some more details but unsurprisingly they didn't want to give more
details other than the public statements they've already made but still we'd
like to thank Jacob Freeman for sending us a rejection message that was nicer
than anything I've ever gotten on Tinder I've never been on Tinder but that's
John speaking but the good news is we're not totally in the dark about what's
going on so let's get started by pointing out the graphics card business
actually isn't as lucrative as you might think it is despite the high prices
for premium models and the high demand we saw during the pandemic AIB Partners
like EVGA Asus gigabyte and many others are usually only running profit margins
somewhere between 5 and 10 percent on their graphics cards after all they have
to pay lots of money to Nvidia and AMD for the GPUs themselves and a recent
report indicated that despite the fact that EVGA has long been considered part
of the upper echelon of graphics card manufacturers in terms of support and overall
quality their margins actually lagged behind most of their competitors because
they outsourced much of the actual manufacturing meaning Vega’s operations
mostly consisted of just engineering the cards While others physically
assembled them and although Outsourcing is usually associated with cutting
costs it appears that in this case EVGA sacrificed money for convenience and
scale and remember how we just mentioned EVGA support the company was rather
generous with its warranty and repair policies which was great for consumers
but also likely cut into the company's already narrow margins even further
especially as they didn't sell at the same volumes as some of their competitors
as many of these other companies have a more Global reach and also sell AMD Radeon-based
cards so this at least partially explains why EVGA is getting out of the
graphics card business entirely but not about the reported specific beefs they
had with Nvidia as a partner.
Consumers won't be strangers to how NVidia’s pricing is famously hard to predict with announcement day MSRPS often differing significantly from projections by the tech media but it might come as a surprise that AIB Partners also find out official pricing around the same time as you and me at home do and by then the cards are already in production without the AIB partner even knowing how much money they owe Nvidia not to mention that Nvidia is rather strict about designs it allows AIB Partners to create and while it may help protect stability and consistency across the product line-up regardless of who you buy your graphics card from and may stop AIB’s from designing something oh overly exotic that ends up not working well and hurting NVidia’s reputation it also hamstrings the AIB's ability to innovate and set themselves apart from each other so while both sides seem to have valid concerns at the end of the day a smaller company like EVGA was taking huge losses on higher end cards especially as they compete against NVidia’s own Founders edition cards which are the cheapest on the market and the models that consumers who simply want a GPU without extra bells and whistles and dragon decals will gravitate towards needless to say the opaque pricing and the fact that they were getting undercut by Nvidia itself left EVGA feeling more than a little miffed and left them without much of a reason to carry on with their graphics card business in the wake of both the crypto crash and the higher production costs and thus even thinner margins of the new RTX 4000 series unlike many of their competitors which make both Nvidia and AMD based graphics cards EVGA exclusively made GeForce products so they don't have a Radeon line-up to fall back on and even if they did they'd still be facing the same issues we mentioned in the first half of this video the good news for EVGA is that they have a successful power supply business that has much higher profit margins that the company reportedly plans to Soldier on with but if you had your heart set on a FTW Lovelace card for your next gaming rig sadly you're just going to have to take