EVGA's low profit margins may have been partially self-inflicted, report says

[AlphaX]

In context: This past weekend, EVGA announced that they would no longer produce graphics cards ahead of Nvidia's reveal of their RTX 4000 series GPUs. EVGA claimed their relationship with Nvidia was "abusive" and unfair, but a report from Igor's Lab claims EVGA's issues may have been partially self-inflicted.

Many tech fans and enthusiasts were shocked over the weekend by the news that EVGA, one of the more popular AIB manufacturers, would no longer produce graphics cards based on Nvidia GeForce GPUs. EVGA stated that their relationship with Nvidia was "abusive" and accused Nvidia of having a "severe lack of communication" when it came to pricing for graphics cards.

The lack of communication reportedly resulted in EVGA having significantly reduced profit margins, especially following the recent price cuts on higher-end Ampere graphics cards. EVGA notes that they have been losing hundreds of dollars on RTX 3080 and RTX 3090 tier cards ever since the recent market decline and subsequent price drops.

However, a report from Igor's Lab claims that EVGA's issues with profits may have been somewhat self-inflicted. Igor notes that EVGA operates differently compared to other AIB producers like Asus, Gigabyte, and many others. Unlike those companies, EVGA outsources the circuit boards and coolers to third parties, which increases the overall cost of producing a card. Igor claims this outsourcing drops EVGA's profit margins to around 5%, as opposed to other manufacturers whose margins sit around 10%.

According to Igor, EVGA's generosity has also been one of their downfalls. EVGA's graphics cards have had significantly longer warranty periods than competitors, and EVGA has also offered a "step-up" program, allowing a consumer to upgrade their GPU should their current card be rendered "obsolete" by a new release.

Igor spoke to an anonymous competitor, who claimed that EVGA's strategy was "suicidal" and that "if it were profitable, we would have done it long ago."

It's fair to assume that EVGA is being truthful with their claims regarding Nvidia's abusive treatment of manufacturers. Nvidia has been known to set strict guidelines and deadlines for product releases. A report from JPR shows that Nvidia's guidelines have allowed Nvidia's profits to grow rapidly, while the AIB manufacturer's profit margins have fallen nearly 20% since 2000.

All in all, the dust of the situation is still settling and we currently do not know the whole story, as we've only heard EVGA's side of the story. It is also possible that Nvidia may not comment on the situation, leaving curious users further in the dark as to what is really going on. One thing is for certain: EVGA's upcoming absence from the graphics card market is unfortunate to see, and we hope they can find success moving forward in other product categories.

Permalink to story.

https://www.techspot.com/news/96035-evga-low-profit-margins-may-have-partially-self.html

 

[punctualturn]

And just like that, the hit pieces are starting to show, just to once again, protect poor and defenseless Nvidia....

 

[PEnnn]

And just like that, the hit pieces are starting to show, just to once again, protect poor and defenseless Nvidia....

Nvidia has shills in high places. And low places too..

 

[toooooot]

It seems simple to me. If partnership does not profit you anymore, you say goodbye to your partner. Truth or not, rumors don't mean much when main point is the dropping profits.
I always liked evga cards. I still have few old ones I did not sell like the rest and they are in perfect shape.
Now it is all a out 3 vs 2 year warranty manufacturers. I would always go 3 regardless off brand .
Btw, I had to replace a fan of asus video card. These fans are absolute lowest quality crap. A card costs hundredth and hundredth of dollars, yet they have to go lowest quality fans they can find. It is pathetic.

 

[Inthenstus]

This is a low blow imo. EVGA created the absolute best cards on the market. Why? Because the additional overhead it cost them to have their cards manufacturered. This is just a smear campiegn being pushed by NVIDIA.

 

[WhiteLeaff]

Oh Yeah... it's EVGA's fault for offering exceptional quality products and support... and not Nvidia's fault for aggressively increasing its own profit margins by eating away at partners' margins. Make sense...

 

[Cycloid Torus]

Wish they would continue providing mid level cards.

 

[dangh]

Haha, who is surprised that other companies gives shitty warranty to ensure that they are profitable?
Evga did something wrong - they delivered solid product with good warranty to ensure users are happy. This surely is suicidal to any other company. Lol.

 

[mbrowne5061]

Igor spoke to an anonymous competitor, who claimed that EVGA's strategy was "suicidal" and that "if it were profitable, we would have done it long ago"... Nvidia's guidelines have allowed Nvidia's profits to grow rapidly, while the AIB manufacturer's profit margins have fallen nearly 20% since 2000.

Translation:
EVGA was willing to take a smaller profit margin, compared to the other AIBs, in exchange for putting out a higher quality product that made and kept customers. Then nVidia started eating away at the profits of their AIBs, the water rose, and EVGA said "F- this" and bailed.

Things keep going like this - and it looks like they will with the 40~ series pricing - the rest of the AIBs will soon have to make the same choice. And I bet nVidia wants this to happen; they want to make their own cards and sell directly, but they can't directly kick out their AIBs without potentially getting regulators taking a closer look at their business practices.

 

[punctualturn]

Translation:
EVGA was willing to take a smaller profit margin, compared to the other AIBs, in exchange for putting out a higher quality product that made and kept customers. Then nVidia started eating away at the profits of their AIBs, the water rose, and EVGA said "F- this" and bailed.

Things keep going like this - and it looks like they will with the 40~ series pricing - the rest of the AIBs will soon have to make the same choice. And I bet nVidia wants this to happen; they want to make their own cards and sell directly, but they can't directly kick out their AIBs without potentially getting regulators taking a closer look at their business practices.

That is exactly what 3DFX did back in the day, but they rushed the move and it burned them.

Even funnier, the other reason they failed was because Nvidia came into the market and had *gasp* AIBS!.

I really, truly hope that RDNA 3 is as good or just a bit better than the 40 series and the fanbois finally open their eyes.

Heck, at this point, I hope that Intel gets their GPU bussines straighten out, just so nvidia gets cut down a couple of notches.

 

[terzaerian]

EVGA's generosity has also been one of their downfalls.

Translation, if only EVGA had treated their customers like **** then they would have made obscene profits instead of great profits

Don't know who Igor is but he can piss right off back to Frankenstein's Castle

 

[Theinsanegamer]

The first stage is denial, and holy hell does this comment section embody that.

 

[hahahanoobs]

I think it goes WELL beyond warranties.

80% of revenue was GPU in 2022 while everyone else is making GPUs as well as monitors, mice, keyboards, motherboards, ram, cases, fans, SSDs....
Boohoo eVGA? Bad Nvidia? Gimme a break. It didn't make sense from the jump. Low dGPU margins are not new. eVGA conveniently doesn't share financials. Stinks of mystery.

There is NO FREAKING WAY you can maintain a company like eVGA after being so far behind the competition with tiny product portfolio. 2% of revenue was motherboards?! 18% or so for PSU?! In 2022?! Is eVGA exempt from competing outside of GPUs?

Build me two computers you'd be proud of:
One with eVGA parts, and the other with... ASUS or MSI or Corsair, or NZXT parts. The comparison isn't even fair and that's a problem. A business ending problem.

 

[defaultluser]

Nvidia has shills in high places. And low places too..

this isn't a shill: its the cost of being "yet-another re-brander OEM" - the same reason their motherboards have never astounded anyone (and are usually late, compared to big OEMs!) The PSUs are similar re-brands of Super flower and Seasonic, and like everyone else, the dozens of different water-cooling kits are all from the same handful of hardware manufacturers!)

I'm just amazed that a company as big as EVGA, we only knew this about their video card division after the segment died!

 

[lripplinger]

I have found EVGA is a solid, customer focused company. My experience with them has always been positive. Their customer service really set them apart from their competitors. I will keep buying their power supplies for as long as they continue to sell them. I was hoping EVGA might go look at AMD or Intel for a partnership, but it seems that won't happen.

 

[terzaerian]

The first stage is denial, and holy hell does this comment section embody that.

That's my secret cap

I'm always at the second stage of grief

 

[kiwigraeme]

Out of curiosity is say a EU Asus or GigaByte RTX 3080 the same as USA one

ie given consumer protections in EU , Australia , NZ etc are SO much better - are they the same?

 

[mbrowne5061]

Out of curiosity is say a EU Asus or GigaByte RTX 3080 the same as USA one

ie given consumer protections in EU , Australia , NZ etc are SO much better - are they the same?

Highly unlikely that any company is releasing region-specific cards. If they are, the changes are likely minor, manufacturing-focused ones that only exist to comply with some kind of health/environment regulation. The most I can think of is maybe some kind of difference thermal pads/grease? But that is a huge stretch already.
Running two slightly different versions of the same product is just bad manufacturing practice. You only do that when you absolutely have to. Far more likely that they will build a card that is compliant for all available markets, and sell the same thing to everyone.

 

[envirovore]

The first stage is denial, and holy hell does this comment section embody that.

Don't get me wrong, with BFG long out of the GPU game EVGA were the AiB to go with and I'm glad I got one of their 3080's this last gen (and was planning on one of their 4080's tbh), and it's a shame to see them go whether it be due to just feeling burned by Nvidia or whether it's due to losing profit because they wanted to focus on providing a superior product and customer support.

But the cries of 'nvidia hit piece! OMG you guys are such Nvidia shills'...ffs. I this comment section drinks more and more conspiracy Kool aid on a daily basis, it's getting pretty dumb.

I realize most will consider it 'and nothing of value was lost' but damn, with how pants on head dumb some of these threads get I'm ready to just stop checking this site.

 

[toooooot]

I have found EVGA is a solid, customer focused company. My experience with them has always been positive. Their customer service really set them apart from their competitors. I will keep buying their power supplies for as long as they continue to sell them. I was hoping EVGA might go look at AMD or Intel for a partnership, but it seems that won't happen.

Same. I really enjoyed buying from them. I think I had 3 cards in a row purchased from them or their brand. Hopefully they can fix their problems.