Behind-the-scenes account shows how difficult it was for EVGA to maintain its GPU business.
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As he tells it, Hedrick's concerns about the relationship between the two companies began when it first released the Founders Edition GPUs in 2016. While EVGA had sold Nvidia reference designs with its own brand on the box before, its primary (and only) GPU supplier was now competing directly against it by selling graphics cards directly to customers, bypassing board partners entirely.
However, the biggest challenge that EVGA faced arose, according to Hedrick, was when Nvidia began requiring its partners to sell a model that would hit the announced MSRP, even if it sold at a loss. Companies that did not comply would get reduced chip allocations, so partners needed to produce a loss leader product to ensure that they would get all of the chips they would need to satisfy demand.
“The models on which we did not lose money had better circuit boards and cooling of our own, but they also carried a substantial premium,” Hedrick writes. “To a customer comparing them with the advertised starting price, it could look as though EVGA was charging an enormous amount just for those additions.”
In Hedrick's view, as Nvidia Founders Edition cards got better with each generation, more expensive AIB offerings started to make less sense for most buyers. This led to loss-leading models constantly being sold out, while customers who chose more premium models started to hold on to their GPUs for an extra generation or more. “For a manufacturer like EVGA, those decisions carried very different consequences. We still had cards to sell and a business to sustain; enough customers sitting out a generation could be financially devastating,” Hedrick wrote.
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Key considerations
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Reference reading
- https://www.tomshardware.com/pc-components/gpus/SPONSORED_LINK_URL
- https://www.tomshardware.com/pc-components/gpus/former-evga-employee-recounts-companys-degrading-relationship-with-nvidia-before-2022-blow-up-founders-editions-pricing-mandates-and-forward-looking-tech-all-led-to-friction#main
- https://www.tomshardware.com/membership
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