Former EVGA employee recounts company’s degrading relationship with Nvidia before 2022 blow-up
Former EVGA product manager Brendon Ray Hedrick has posted a personal account of his time at the company in which he details the challenges that EVGA encountered near the end of its partnership with Nvidia. When he left the company in 2019, Hedrick predicted that the business relationship between the two companies would eventually implode, which proved to be largely accurate when EVGA exited the GPU market in 2022.
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.
In reference to Nvidia's introduction of real-time ray tracing tech on its RTX 20-series cards in 2018, Hedrick recounts that Nvidia could afford a long technological bet. My concern was whether a company as lean as EVGA could comfortably absorb the difficult part of it," in reference to convincing consumers that the upgrade to the new tech was worth it at a time when only a tiny handful of games featured RT.
When Hedrick left the company, he says he believed that EVGA and Nvidia had about four or five years left before the situation led to a confrontation. This prediction came true a year earlier than Hedrick projected. In 2022, EVGA announced that it would no longer make partner cards with the advent of the RTX 40-series and that it would exit the GPU market once its stock of RTX 30-series GPUs had run out.
At that time, it was reported that Nvidia GPUs made up 78% of EVGA's revenue while contributing only a tiny percentage of the company's overall profit. Other reports also said that while lower-tier products like the RTX 3060 remained profitable, EVGA lost hundreds of dollars for every RTX 3080 and higher GPU model that it sold.
While it's easy to blame Nvidia's policies for EVGA's exit from the GPU market, other analyses partially blamed the company for practices like contracting manufacturing to third parties and providing overly generous customer service for its failures. Its focus on North America and Europe also led to the company shipping fewer units compared to its competitors, meaning its fixed costs were further cutting into its already narrow margins. Although EVGA's customer-centric approach made it one of the most beloved brands in the GPU space, its strategies ultimately left it vulnerable, and we all know how the story ended.