News EVGA Abandons the GPU Market, Reportedly Citing Conflicts With Nvidia

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JarredWaltonGPU

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According to Steve Burke from Gamers Nexus, it was a group of 3 people who interviewed EVGA CEO Andrew Han.
  • Steve Burke from Gamers Nexus
  • Jay from Jays2Cents
  • Jon Peddie of Jon Peddie Research
That's a very narrow group of media/outsiders to pick from to do your big interview.
Yeah, it's a very interesting way of announcing a breakup. A very PUBLIC way of doing it as well. Some (most?) employees likely found out via some YouTubers, just before the meeting with the CEO Andrew Han. Or at least that's how it sounded; maybe they found out just before the video embargo was lifted? I mean, I guess he couldn't reasonably invite 20 or 50 publications to a briefing and then expect it not to leak. With only three people in attendance, and perhaps because there was some trust between them, that's a way to control the situation.

But then it goes back to what Steve at GN was saying about there being some discrepancies. EVGA's CEO is basically killing 80% of his business. He won't retire. He won't sell. He won't even do any other GPUs (ie, AMD or Intel) — possibly because he just feels the entire GPU market is set for a major downturn. That's a lot of really odd decisions for a CEO to make that ultimately point to EVGA closing up shop, or at least massively downsizing. And it was all done after the major profits of the past two years were over. Jay said he felt like he spent four hours trying to talk Andrew out of this move. That suggests he also has some major concerns with what's happening.

Personally, I think it's stupid to shut down the GPU division like this and refuse to sell. Even if EVGA was sold off to someone "unethical," that might hurt Andrew Han's feelings or whatever, but hardly anyone really thinks of him when they think of EVGA. It's just a company that does decent graphics cards and some other PC hardware to most of us. Selling the company couldn't possibly be any worse for the current employees AFAICT. Because it looks as though 80% of them will have to find a different job in the near future, and a new owner almost certainly wouldn't be doing anything worse than that.

I don't see how EVGA gets through this without ending up where BFG went. And how much sense would it make for EVGA to continue making PSUs under their current brand? Change the name to EPSU, because there's no longer any VGA. PSUs might have higher margins, but they're also far less exciting and far lower sales compared to GPUs. EVGA was 40% of the US Nvidia market. That's massive. If it made 20% profit off each card sold, compared to 60% profit off each PSU sold, the GPU division still would have brought in far more money.

But this is the decision of the CEO, since EVGA isn't publicly traded. He can do whatever he wants, and right now he apparently wants to spit in Nvidia's face, let the whole world know that he thinks Nvidia is a bad business partner, and take his GPU ball and go home. I don't doubt that it's very hard at times to do business with Nvidia. I guess not doing business at all will be better. Or if EVGA now changes course and decides to start doing AMD or Intel cards, or sells off the company, then maybe this was just a big PR move to get the appropriate buyer or partner or whatever. We'll see.
 
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Yeah, it's a very interesting way of announcing a breakup. A very PUBLIC way of doing it as well. Some (most?) employees likely found out via some YouTubers, just before the meeting with the CEO Andrew Han. Or at least that's how it sounded; maybe they found out just before the video embargo was lifted? I mean, I guess he couldn't reasonably invite 20 or 50 publications to a briefing and then expect it not to leak. With only three people in attendance, and perhaps because there was some trust between them, that's a way to control the situation.

But then it goes back to what Steve at GN was saying about there being some discrepancies. EVGA's CEO is basically killing 80% of his business. He won't retire. He won't sell. He won't even do any other GPUs (ie, AMD or Intel) — possibly because he just feels the entire GPU market is set for a major downturn. That's a lot of really odd decisions for a CEO to make that ultimately point to EVGA closing up shop, or at least massively downsizing. And it was all done after the major profits of the past two years were over. Jay said he felt like he spent four hours trying to talk Andrew out of this move. That suggests he also has some major concerns with what's happening.

Personally, I think it's stupid to shut down the GPU division like this and refuse to sell. Even if EVGA was sold off to someone "unethical," that might hurt Andrew Han's feelings or whatever, but hardly anyone really thinks of him when they think of EVGA. It's just a company that does decent graphics cards and some other PC hardware to most of us. Selling the company couldn't possibly be any worse for the current employees AFAICT. Because it looks as though 80% of them will have to find a different job in the near future, and a new owner almost certainly wouldn't be doing anything worse than that.

I don't see how EVGA gets through this without ending up where BFG went. And how much sense would it make for EVGA to continue making PSUs under their current brand? Change the name to EPSU, because there's no longer any VGA. PSUs might have higher margins, but they're also far less exciting and far lower sales compared to GPUs. EVGA was 40% of the US Nvidia market. That's massive. If it made 20% profit off each card sold, compared to 60% profit off each PSU sold, the GPU division still would have brought in far more money.

But this is the decision of the CEO, since EVGA isn't publicly traded. He can do whatever he wants, and right now he apparently wants to spit in Nvidia's face, let the whole world know that he thinks Nvidia is a bad business partner, and take his GPU ball and go home. I don't doubt that it's very hard at times to do business with Nvidia. I guess not doing business at all will be better. Or if EVGA now changes course and decides to start doing AMD or Intel cards, or sells off the company, then maybe this was just a big PR move to get the appropriate buyer or partner or whatever. We'll see.
I don't disagree on most, but I do think you need to revisit some points:

1.- EVGA's 80% gives them close to no profit, if at all, going by their statement via GN. You can't run a business when you're running 80% of your whole business at or under cost. That's just stupid and a huge waste of effort. Like it or not, EVGA's CEO is not there to make nVidia any favours with what he has built with EVGA over the years. If the margins are so low that it makes all that extra effort and passion not pay out for him, then why keep at it? His peace of mind will help him re-focus on something that will make him profit, for sure. I mean, EVGA started small and has great brand recognition, so they still have some mind capital they can depend on, for a short while, at least.
2.- Continuing from #1, the CEO has made EVGA what it is today and I'm pretty sure all its employees love working there. Sure, no person alive is perfect in any regard and his decision will definitely have consequences, immediate even, on the whole Company and their workers, but I'd give him the benefit of the doubt on this one. It IS EVGA we're talking about and, even if you don't know/like the person, it is HIS Company. We'll have to see how this goes, but I'll be hopeful for EVGA's future.
3.- If they decide to turn to another business market, like Motherboards for instance, if that division makes 30% margins, that is money they can re-invest in EVGA immediately and not wait for nVidia to help them turn ship with 80% that makes zero margin. Look at Asus, Corsair, MSI and a few others. There's so many different markets they can enter where people will give them the benefit of the doubt that they have good opportunities ahead and I'd consider that a good thing. To diversify, they need solid business lines and projections for getting good credit ratings. If 80% of your Company has a very uncertain future, your rating for big investment goes down and you can't grow.

Regards.
 

Phaaze88

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They definitely didn't make any "cheap cards". Where that idea comes from bewilders me.
From what I've seen over the past year or two over on the EVGA forums, it looks like that due to EVGA selling so many more cards than the other AIBs.
So when crap went south for some users[people tend to remember and share the bad experiences far more than the good ones], their name popped up far more often than the other brands, thus the impression EVGA makes 'cheap cards'.

More people need to look at things objectively.
If it were Asus that were the biggest seller, they'd look the same(minus the CS part).
 
I don't see how EVGA gets through this without ending up where BFG went. And how much sense would it make for EVGA to continue making PSUs under their current brand? Change the name to EPSU, because there's no longer any VGA. PSUs might have higher margins, but they're also far less exciting and far lower sales compared to GPUs. EVGA was 40% of the US Nvidia market. That's massive. If it made 20% profit off each card sold, compared to 60% profit off each PSU sold, the GPU division still would have brought in far more money.
The hypothetical I believe you are trying to make is flawed. Their margins are probably less than 10% on average and they are losing hundreds of dollars per card for a while now. The dichotomy of having to compete with your "partner" that is selling you the chips for a profit margin likely higher than your own sounds like bad business for EVGA. A quick thought experiment will show what the actual profit opportunity EVGA has with GPUs versus their PSUs and tertiary products. Lets say EVGA has 100,000,000 dollars in revenue. Lets say their profit margin is 8% (I still think that's liberal) at 80% of their total revenue. This creates 6,400,000 dollars of profit. Lets say their profit margin on their tertiary products is 20% (this is also liberal) at 20% of their revenue. This creates 4,000,000 dollars in profit. So 80% of their business is roughly 60% of their profit and that is, imo, using generous numbers.

With a pure business mindset, they could reduce half or more of their payroll and keep around half of their profit making power while not getting blue-balled by a company that is your "partner" while they consider you a leach while they are actually leaching profit from you by selling their cards at a much lower price. EVGA saw that they were losing hundreds of dollars selling their 3000 series cards while Nvidia is most likely breaking even or making marginal profits selling their own cards. If I were the CEO of EVGA I would also see the writing on the wall, AIBs are going the way of the dinosaur because of Nvidia's practices and EVGA is pulling out while making a statement. Is it the best business decision right now? Probably not. Will this decision create changes in the industry? Unlikely.
 

Kamen Rider Blade

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Yeah, it's a very interesting way of announcing a breakup. A very PUBLIC way of doing it as well. Some (most?) employees likely found out via some YouTubers, just before the meeting with the CEO Andrew Han. Or at least that's how it sounded; maybe they found out just before the video embargo was lifted? I mean, I guess he couldn't reasonably invite 20 or 50 publications to a briefing and then expect it not to leak. With only three people in attendance, and perhaps because there was some trust between them, that's a way to control the situation.
Could Andrew Han have invited more than 3 people, obviously yes he could. But why would he? Why did he pick those 3 men to do the private personal interview?

The people he invited were people he trusted from the media / industry to give a "Fair, Honest, and/or Unbiased" look at this situation.

That's the only logic that I can conclude.

But then it goes back to what Steve at GN was saying about there being some discrepancies. EVGA's CEO is basically killing 80% of his business. He won't retire. He won't sell. He won't even do any other GPUs (ie, AMD or Intel) — possibly because he just feels the entire GPU market is set for a major downturn. That's a lot of really odd decisions for a CEO to make that ultimately point to EVGA closing up shop, or at least massively downsizing. And it was all done after the major profits of the past two years were over. Jay said he felt like he spent four hours trying to talk Andrew out of this move. That suggests he also has some major concerns with what's happening.
He won't do anything with AMD or Intel at the moment. That can obviously change in the future. But currently, he feels "Burned" by nVIDIA and has Commitment Issues due to the abusive relation with nVIDIA.

This decision must be recent / fresh in his mind and still weigh in heavily on his mind because he spent 20+ years of his life building eVGA into what it is. It's not a easy decision to cut ties, but it's one that he decided to make. And as with any bad breakups in relationships, he might be having cold feet getting back into the "Dating Pool" or in his case "GPU Provider / AIB manufacturer" pool.

Given the MASSIVE influx of GPU's from the Crypto Mining Crash, nVIDIA setting Price Floors & Ceilings on their AIB's, and being forced to buy inventory at massively marked up prices during the GPU / Mining induced shortage. He probably sees his profit margin go to near 0 or go Red on his balance sheet.

I don't blame Andrew Han for wanting to quit if the current market is the way it is.

Rumors are that there is over a year's worth of supply of RTX 30 series sitting in ware houses, ready to be sold; but with used market tsunami & unsold stock + RTX 40 series and AMD's RDNA 3 series coming out, it's going to be ROUGH to get rid of existing inventory that their $$$ is tied up into.

Personally, I think it's stupid to shut down the GPU division like this and refuse to sell. Even if EVGA was sold off to someone "unethical," that might hurt Andrew Han's feelings or whatever, but hardly anyone really thinks of him when they think of EVGA. It's just a company that does decent graphics cards and some other PC hardware to most of us. Selling the company couldn't possibly be any worse for the current employees AFAICT. Because it looks as though 80% of them will have to find a different job in the near future, and a new owner almost certainly wouldn't be doing anything worse than that.
EVGA is Andrew Han's private company, he can do with it what he wants. If that means down-sizing, who are we, outsiders, to say what is good for him.

EVGA is like Andrew Han's personal dream come to life. It ate up over 2 decades of his life and created countless Video Cards that many consumers enjoyed.

Let's be supportive of what Andrew Han wants to do in the future. Let's be encouraging to him.

I don't see how EVGA gets through this without ending up where BFG went. And how much sense would it make for EVGA to continue making PSUs under their current brand? Change the name to EPSU, because there's no longer any VGA. PSUs might have higher margins, but they're also far less exciting and far lower sales compared to GPUs. EVGA was 40% of the US Nvidia market. That's massive. If it made 20% profit off each card sold, compared to 60% profit off each PSU sold, the GPU division still would have brought in far more money.
The only solution I see is for EVGA to go with AMD. Intel is a mess with ARC, I don't trust ARC's future in dGPU's given what I'm hearing BtS (Behind the Scenes).
The question is whether or not EVGA has a "Non Compete" clause with nVIDIA and how long will it last?
If anybody has insider knowledge of this, I'd like to know.

But this is the decision of the CEO, since EVGA isn't publicly traded. He can do whatever he wants, and right now he apparently wants to spit in Nvidia's face, let the whole world know that he thinks Nvidia is a bad business partner, and take his GPU ball and go home. I don't doubt that it's very hard at times to do business with Nvidia. I guess not doing business at all will be better. Or if EVGA now changes course and decides to start doing AMD or Intel cards, or sells off the company, then maybe this was just a big PR move to get the appropriate buyer or partner or whatever. We'll see.
Your options is to do business with nVIDIA, and eventually your Video Card division will go in the Red.
Why on Earth would you want to lose money? You don't exist to just get squeezed out of the Video Card market by Jensen Huang.
Jensen Huang has made it public that he HATES AIB's and thinks they're lazy & adds no value.
Jensen Huang has made it public that he wants nVIDIA to become like Apple, FULL VERTICAL INTEGRATION.

The question is how long will the other AIB's hang on?

XFX swapped sides, BFG went down and closed shop.

EVGA currently is calling it quits.

When will ZOTAC, PNY, ASUS, GIGABYTE, MSI all call it quits in North America?

How long before the AIB's in other regions like GALAX, Gainward, Colorful, etc stay around?

Time will obviously tell, but given the shrinking profit margins, I wouldn't be surprised if we see all AIB partners pushed out before the end of 2030 given the accelerated shrinking profit margins for AIB's.

Jensen Huang is 59 y/o, how long do you think he can remain in good health / faculties and still run nVIDIA?

If his ultimate plan is to get rid of all AIB's without explicitly kicking them out, but squeeze them out financially, Jensens master plan is working to a T.
He only has 5x more AIB's in North America and a handful outside to worry about.

At this rate, I'm sure all the division managers in those other nVIDIA partnered respective AIB companies are carefully watching their balance sheet and making sure that it makes financial sense to still do business in the nVIDIA AIB market.
 
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Kamen Rider Blade

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1.- EVGA's 80% gives them close to no profit, if at all, going by their statement via GN. You can't run a business when you're running 80% of your whole business at or under cost. That's just stupid and a huge waste of effort. Like it or not, EVGA's CEO is not there to make nVidia any favours with what he has built with EVGA over the years. If the margins are so low that it makes all that extra effort and passion not pay out for him, then why keep at it? His peace of mind will help him re-focus on something that will make him profit, for sure. I mean, EVGA started small and has great brand recognition, so they still have some mind capital they can depend on, for a short while, at least.
the EVGA brand loyalty is on a Timer, the longer he stays out of the GPU game, the harder it will be to bring back customers.

TICK TOCK Andrew Han.

Make your decision, are you going to keep out of the GPU game, or are you going to join AMD?

You've made your displeasure of nVIDIA publically known. Now there are 2x obvious paths, what will you take?

Can AMD bring EVGA to the fold?

Can Lisa Su talk some sense into Andrew Han. One Taiwanese CEO to another?
 

BILL1957

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One thing no one seems to have considered is none of us know what the contract between Nvidia and EVGA consist of.

It is always possible that in EVGA's contract could be a non-compete clause for a specific length of time which legally would forbid EVGA from making AMD or Intel cards even he wanted to at this point in time.
Not saying this is what is the reason but it is possible.
 

gg83

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EVGA dropping out of the video card business is complete coorporate suicide.
It's like if McDonalds dropped out of the hamburger business to refocus their business on selling Happy Meal toys. It would be like Sony shutting down Playstation and pumping the last of their money into Sony Pictures.

Andrew Han simply wants to be (and will be) fired. There's no other reasonable explanation for this action.
I was thinking the same thing. He will just get fired as ceo when he said something like " we will not sell gpus as long as I'm ceo"
 

Kamen Rider Blade

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in 2012 they expand their business beyond GPU so they can survive. but the thing with XFX is when they were selling nvidia GPU they were among the top AIB like EVGA. now people just see them as "just another AMD AIB". they did not see them as a top AMD partner like Sapphire.
If you're competing properly and everybody is on their "A-game". Then that is the expected end result.

If you wanted to be a top partner like Sapphire, you need to go "Above & Beyond".
 

spongiemaster

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He's the sole owner of the company, the company is private, so the only person he is accountable to is himself.
When the company folds, he'll have fired himself. It really looks and sounds like he just doesn't want run the company any more but a false sense of righteousness isn't letting him sell it to someone else to run. Pretty selfish move. If you want to spend more time with your family, move on, don't take the whole company down with you.
 

Co BIY

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Getting out of bad business is good business.

Crypto-crash, used mining cards destined to be dumped all over the markets, down economies, worldwide glut of COVID purchased tech and the key supplier who wants to cut you out of the business.

Sounds like a move that should not have been put off any longer. He and his company can focus on better opportunities.

I do not envy Intel trying to break into this market right now. But they need a GPU product to complement their complete lineup and offer continue to offer well-integrated products that are the default corporate choice.
 
The hypothetical I believe you are trying to make is flawed. Their margins are probably less than 10% on average and they are losing hundreds of dollars per card for a while now. The dichotomy of having to compete with your "partner" that is selling you the chips for a profit margin likely higher than your own sounds like bad business for EVGA. A quick thought experiment will show what the actual profit opportunity EVGA has with GPUs versus their PSUs and tertiary products. Lets say EVGA has 100,000,000 dollars in revenue. Lets say their profit margin is 8% (I still think that's liberal) at 80% of their total revenue. This creates 6,400,000 dollars of profit. Lets say their profit margin on their tertiary products is 20% (this is also liberal) at 20% of their revenue. This creates 4,000,000 dollars in profit. So 80% of their business is roughly 60% of their profit and that is, imo, using generous numbers.

With a pure business mindset, they could reduce half or more of their payroll and keep around half of their profit making power while not getting blue-balled by a company that is your "partner" while they consider you a leach while they are actually leaching profit from you by selling their cards at a much lower price. EVGA saw that they were losing hundreds of dollars selling their 3000 series cards while Nvidia is most likely breaking even or making marginal profits selling their own cards. If I were the CEO of EVGA I would also see the writing on the wall, AIBs are going the way of the dinosaur because of Nvidia's practices and EVGA is pulling out while making a statement. Is it the best business decision right now? Probably not. Will this decision create changes in the industry? Unlikely.
I guess not enough people payed enough attention at this part.
Steve said that lower end cards are still profitable and "only" the high-end cards are losing them money, they did not lose money on every gpu.
This is because the high-end cards are what gave evga the good name that ensured their high market share, so they were making them as good as possible even losing money on them.
Overall low+high end cards together we have no idea about the sales numbers and what kind of money they where making from it, other than rough estimates.
View: https://youtu.be/cV9QES-FUAM?t=671
 
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Kamen Rider Blade

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When the company folds, he'll have fired himself. It really looks and sounds like he just doesn't want run the company any more but a false sense of righteousness isn't letting him sell it to someone else to run. Pretty selfish move. If you want to spend more time with your family, move on, don't take the whole company down with you.
That's his choice. It's his company, he can do with it whatever he wants.

Regardless of how we may feel about it.
 
I guess not enough people payed enough attention at this part.
Steve said that lower end cards are still profitable and "only" the high-end cards are losing them money, they did not lose money on every gpu.
This is because the high-end cards are what gave evga the good name that ensured their high market share, so they were making them as good as possible even losing money on them.
Overall low+high end cards together we have no idea about the sales numbers and what kind of money they where making from it, other than rough estimates.
View: https://youtu.be/cV9QES-FUAM?t=671
I payed attention to it. I payed very close attention to when he said they were losing hundreds of dollars per card for 4/9 different chips they make cards for. You are right that we do not know specific sales numbers, but that is why I called it a thought experiment and not a reality check. My point was that we know that they are losing money on 3080/ti, and 3090/ti cards but are making money in the middle with the 3050, 3060/ti, 3070/ti. Historically margin on middle end and lower end cards is much slimmer than the top end cards. This means that my hypothetical with an average profit margin of 8% across their graphics card revenue is not out of the realm of possibility.
 

Heat_Fan89

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I'm of the belief that EVGA are not done selling GPU's. There maybe something to what others have commented on that perhaps there are clauses put in place where they cannot sell AMD or Intel cards for a certain amount of time.

If the CEO truly means what he says, he would have sacked most of his staff. He chose to layoff a small percentage which might indicate something is up and EVGA might not be throwing in the towel. They have built a solid reputation over the years even going as far as replacing burned out GPU's from Amazon's MMO under warranty.
 

Tom Sunday

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As an aside, this is an enormous opportunity for Intel. If they could entice EVGA to produce ARC GPUs, then the name reputation EVGA has built would go into helping Intel succeed instead of boosting Nvidia. This could be the big break that gets people to stop laughing at ARC and take it seriously as an upcoming platform.
Indeed you are correct and it may come to this. It’s almost a natural way to continue business. No doubt in buying an ARC product improved, supported and marketed by EVGA is a moneymaker to be sure and good for the consumer as well. I also like the idea EVGA would then be partnering with an all American manufacturer sporting deep pockets and eyes on the future. Like INTEL now opening new major FABS all over this country besides its many expansions like in Hillsboro, OR with its over 22,000 employees.

I also believe that NVIDIA will ultimately be shedding all of its still existing partners to basically monopolize the GPU market. Many Chinese companies with other products have done so in the past as well! The bad news for EVGA however is that it generally cannot survive having severed such a large GPU income stream, as their remaining product offerings are not exactly big ticket items and significant profit generators. There have also been comments if in fact EVGA can actually sustain their absolute sterling support services given their ongoing financial condition! I dearly hope that EVGA can work things out and we as the consumer maintaining such a bright light in this seemingly becoming cut-throat tech market
 

Tom Sunday

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He's the sole owner of the company, the company is private, so the only person he is accountable to is himself.
Yes indeed…that is the beauty in being the sole owner of a company. Free of all the comments and or ill-wishes of the world. Very much what Michael Dell did and simply buying back his company and dismantling the entire Board of Directors. All after his years of battling Silicon Valley skeptics, media cynicism and Wall Street adversaries. Dell Technologies, now stands at more than USD$70 billion and is worth more than four times what it was before it went private again. Dell’s personal net worth in the meantime has risen to $50 billion. The upshot from all of this is the fact that EVGA has a lot of partner opportunities out there and not necessarily just from Intel or AMD! I wish EVGA well!
 

TJ Hooker

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Generally when a company exit a line of business for it's well known, it'd quietly license its brand to some lesser known manufacturer. For instance, we can still buy Kodak cameras and Nokia phones today. What EVGA is doing here is lighting a pile of money on fire.

Just another sign of a world driven crazy by social media.
What does social media have to do with this?
 

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