May 7, 2025 • 46 mins
Every industry is going to be affected by the trade war in different ways. In many cases, we don't know how it's going to play out. Other industries are seeing an immediate impact. Companies that specialize in computer gaming are highly reliant on inputs from China and other East Asian countries. These companies assemble customized gaming rigs and other peripherals (cameras, chairs, controllers, speakers etc.). On this episode, we're joined by Stephen Burke, the founder of Gamers Nexus, a publication and YouTube channel that primarily exists to review products in this space. When the tariffs were announced in early April, he immediately set out to film a documentary titled The Death of Affordable Computing. In that 3-hour video, he talked to numerous players in the space on their profit margins, and how they will be hurt by the changing trade policy. We speak to Steve about this industry, and what he learned about what tariffs will do to both their profitability, or even their viability as ongoing businesses.
Read more:
Microsoft Raises Xbox and Game Prices, Citing Rising Costs
Amazon, Apple Earnings Show Tariffs Are Coming for Big Tech, Too
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Locked Podcast.
Speaker 3 (00:22):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:25):
Tracy, this has come up on the podcast. But one
of the things with the tariffs is I still think
for the most part, people are talking about them from
like a fiscal standpoint, which is, Okay, prices are going
to go up, What is that due to inflation? What
does that due to sales? What is that due to employment?
And less about the potential for like actual economic chaos
(00:46):
because something isn't getting to somewhere else that.
Speaker 4 (00:48):
It needs to be.
Speaker 3 (00:49):
You want to go more micro instead of the macro.
Speaker 4 (00:52):
Yeah, okay, I'm good with that.
Speaker 2 (00:53):
We can talk to economists all day and they all
have their estimates, et cetera. But you know, there's a limit.
Speaker 3 (00:58):
To you know, I think we should so one of
the things we obviously learned during the pandemic is like,
real things exist in the world, and they have to
come from someplace where they're made and be shipped over
and if there are disruptions, then those can snowball in
quite a big way. And there's one product in particular
(01:18):
that I think kind of embodies a lot of what
we talk about when it comes to tariffs and manufacturing
and disruptions, and that's computers right totally. And if you
look at one of those supply chain graphics for computers,
it's just a bunch of lines crisscrossing the world, basically,
like the raw materials coming from Africa or South America
(01:39):
going over to China, and then chips being made in Taiwan,
and then all of those components heading over to the
US where they're put together. It is extremely complex, and again,
like you look at it on a map, it just
looks like a spider web.
Speaker 2 (01:53):
It's a total spider web, because then the chips get made,
and then they go to Malaysia for packaging, and then
they go back to somewhere I skipped up. I think
a lot of people like this idea of reshoring more tech,
and that's obvious. We saw it during the Biden administration
and various efforts on chips et cetera. But it certainly
can't be done overnight. Certainly, And you know again because
(02:17):
as you say, it's this such intense spider web, you know,
it's not even as simple as like, oh, let's move
it from China to the US or something like that.
Speaker 4 (02:25):
It's just so.
Speaker 2 (02:25):
Many different links and parts of what's assembly and packaging
and components and all that, et cetera, that you're going
to announce a new set of tariffs one day and
then an industry will just like digest those tariffs and
then you.
Speaker 3 (02:37):
Know, put them up a US factory the next day, or.
Speaker 2 (02:40):
Put a little markup on it. It's like, okay, you
know whatever, here's the tariff raid. It is twenty five percent.
You know, add twenty five percent to what we sell,
to the selling price. Like the idea that it could
be that simple is uh kind of unrealistic.
Speaker 3 (02:53):
We should talk about it. Let's get granular, Okay.
Speaker 2 (02:56):
So I am very excited. We are going to be
speaking with Steve Burke. He's the editor in chief of
a publication YouTube channel, et cetera called Gamers Nexus. They
do a lot of technical coverage of computer hardware, et cetera,
which is a world that I basically know nothing about.
Speaker 4 (03:12):
I don't know much about gaming.
Speaker 2 (03:14):
I know that gamers, you know, they buy their own chairs,
and they buy their own speakers, and they buy you know,
decked out cooling towers. So that they could play, you know,
super high speed. But I really don't know much about it.
But Steve and his team at Gamers and Nexus about
a week ago, actually two weeks ago, I think it
was April fourteenth, put out an insane documentary, three hour
(03:36):
long documentary on YouTube called the Death of Affordable Computing
and the tariffs impact on the world of gaming Hardware.
It's a truly extraordinary piece of journalism, and we wanted
to talk to the creator behind it and what he
did and what he learned. So Steve Burke, thank you
so much for coming on Odd Lots.
Speaker 4 (03:54):
Oh thanks for having me. Yeah, I'm excited.
Speaker 2 (03:57):
When Tracy and I do an episode of the podcast
talk about terriffs. We're worried that it's going to be
out of date and irrelevant by the very next day.
And that's just like a forty minute conversation sometimes with
like one economist. Just tell us, how did you quickly,
within basically twelve days of quote liberation day unquote, put
together and what did you put together this three hour
(04:18):
documentary about this world of computer hardware, gaming hardware? What
is what was this project?
Speaker 4 (04:24):
It was fun, I mean, it was born from chaos
and so for us, the moment we pulled the trigger
on it was when the use the formal name, the
reciprocal traps as they are called, were put in place.
And so basically immediately as soon as that happened, I
called a bunch of companies I worked with over the
last sixteen years and everybody was ready to go on record,
(04:46):
which is very rare, as I'm sure you all know,
and we booked the flights for twelve hours from that moment.
Wow got on the plane without a return flight and
just went out and started talking to people. So it
was a The underlying concern of this will all be
out of date was definitely there. Our approach to that was,
(05:07):
if we tackle this story in a way where it's
partly about that, if it's about the uncertainty and about
the story of getting the story, that resolves some of
those concerns, because then what you're capturing at least is
the sort of real feelings and the real decision making
that these companies are doing at any given moment.
Speaker 3 (05:27):
Yeah, and at the very least people will learn about
the supply chain of PCs, so you always have that
aspect of it. It seemed like people and again you
spoke to dozens of companies here, but it seemed like
people really wanted to talk about all of this, and
in fact, I think you got some like competitors all
together in a room to have a conversation about how
(05:49):
they were all thinking and dealing with potential tariffs.
Speaker 4 (05:53):
That's right.
Speaker 3 (05:54):
People want to come on and talk about this, which
really highlights the urgency here.
Speaker 4 (05:59):
Yeah, So the biggest challenge that a lot of them
are facing is I think they're concerned about what the
consumer perception will be as prices go up or as
stock drives out. And there's good reason for that. I mean,
consumers absolutely are are kind of Number one coverage angle
is his cynicism. You know, it's being really critical of
(06:22):
what the companies are saying at a given point. This
was an interesting scenario though, where the price increases are
functionally guaranteed in this industry, and I think what the
companies we're worried about is if we're not transparent right
now when we have this opportunity, then people won't necessarily
(06:42):
believe us when we explain why the prices went up.
And you know, consumers, to be clear, should still remain
cynical to a healthy degree, but but should also be
aware that there are real world impacts you know, from
these decisions that are much bigger than any of the companies.
Speaker 2 (06:57):
So no, that actually makes a ton of sense. Why
it would be strategic for these companies to talk about
the real impact so that when they raise the price
of whatever, that people understand. Why but actually talk about this,
setting aside the tariffs, what is this industry? Talk to
us about the existing gamer hardware industry that you set
(07:17):
out to describe.
Speaker 4 (07:18):
In this documentary.
Speaker 2 (07:19):
Oh sure, who are these players? And like where do
they sit? And you know, what do they sell? What
kind of products? You know, give us an overview of it.
Speaker 4 (07:25):
Yeah, So I think the most important thing for anyone
who doesn't pay close attention to it is to be
aware that computer gaming hardware is used in workstations and
scientific computing around the world. So companies that everyone in
your audience would already be aware of, like Nvidia, Intel,
AMD so forth, all the stuff they make for scientific
(07:48):
computing and AI and data center, a lot of that
stuff also exists in some capacity in gaming, and it's
it's potentially the same supply as in the same way
for supply. If it's silicon or shares at least the
architecture of whatever that generation of product is using. And
so there's a lot of crossover. And what that means
(08:09):
is that these multiple technology industries all sort of prop
each other up. You get economies of scale across them.
Because if you're making the wafer that can be used
in a data center card and can also be used
in a gaming card, right, the company has some more
strategic levers to pull for where do they want this
particular chip to go, Which market has demand, has one
(08:31):
dried up, they can move that supply over to something
else and market up more if it's has good yield.
So it's a huge industry. And then as far as gaming,
I don't have the exact numbers off the top of
my head anymore, but not too long ago we received
a press briefing from one of the big three, Intel
and Video or AMD, I don't remember which, but talk
about the sort of worldwide gaming audience PC gaming depend
(08:53):
on who you look at, it's anywhere in the very
high hundreds of millions to the low billions of individuals
who do some form of PC gaming. So it's a
huge industry.
Speaker 3 (09:04):
So you know, Joe's first question was about all the
uncertainty over the tariffs themselves and the fact that we
don't know what's going to happen tomorrow, maybe there's another announcement,
and then maybe the day after there's some backtracking on it.
It seems really difficult to plan for tariffs coming in
when you don't even know what exactly they're going to
look like, or you know when they might actually be
(09:26):
phased in. What were companies actually saying about their plans
for handling this so far?
Speaker 4 (09:32):
So the plans are interesting. The number one thing they
were telling us is that it's difficult to plan when
the plan potentially changes on a daily basis. So a
number of the companies we spoke with, including an Austin,
Texas based repair shop run by a guy named Lewis
Rossman who's kind of well known for Right to Repair
Course Air, which is a huge publicly traded company, so
(09:54):
like you have this huge range, and generally speaking, the
message we received was we can deal with a high tariff,
what we can't deal with is uncertainty. So I don't
know if the timelines are maybe interesting for people, but
just to give an idea for things without even getting
(10:16):
into the discussion of where is the thing made, The
question of how long does it take to make the
thing is maybe kind of colors you know, where their
strategic decision making is coming from. So a silicon wafer
takes maybe about three months to produce, assuming they don't
run a hot lot, and so that's just to kind
of make the wafer. It might be an EID or
(10:36):
a twelve inch wafer that then contains all the silicon
that eventually goes into a computer. So wafer is just
a disc, right, It looks like a CD basically, and
they pattern the silicon on it in a fab. So
Intel has fabs they're building some of the US as
an example, and they then dice that they send it
(10:58):
out to packaging to test to eventually turn into a
finished CPU or GPU that goes on a board and
gets put in a computer. Just to make the wafer,
it's about three months. And so when you're making decisions
that involve macroeconomics, not that I'm not an expert on
that part of it, but you could imagine that it
(11:19):
would be very difficult right to plan how many of
these things you might need. And that's just one part
the computer cases are typically twelve to eighteen months counting
the design stage to get through mass production. The actual
mass production part of it, they might order about four
to maybe six months in advance of when they need
the parts, depending on where Chinese New Year falls in
(11:40):
that window. And so these types of numbers I think
probably you know, give a better indication as to why
it's so difficult to project, because the decisions they're making
now are based off of inventory they placed orders for
at the end of last year.
Speaker 2 (12:10):
You know, I've never been a PC gamer, or really
a gamer of any sort. When I think about computers,
you know, have a I have a Macus or you know,
some laptop, I forget which one, and I run my
Bloomberg terminal on a computer made by Hewlett Packard or
and I think I have a webcam, probably made by Logitech.
When we're talking about the world of the hardware that
(12:31):
you cover, what does the constellation look like of different
players and what the role that they play, Because yeah,
again I'm familiar with Intel, AMD and Video and some
of the popular consumer facing names. But who are the
big names and what do they do that a hardcore
PC gamer would.
Speaker 4 (12:47):
Be thinking about. Yeah, there's a ton of them, so
as you've probably heard of. That's how I'm familiar, I think,
so yeah, yeah, yeah. So there's companies like Asus as
an example, which is one of the larger ones, and
they did just about everything, so they all symbol computers.
They also make motherboards. There's some scare quotes around that
make I'll maybe come back to, and they make video
(13:08):
cards all this sort of type of thing. Laptops. MSI
is another one. Course, Seria is huge. So these three
have just named they're all massive in the space. They're
billion dollar companies. You also have hundreds of smaller ones.
So just to ratle off a few, but Cooler Master,
Height Crucial is actually larger, owned by Micron, and you
(13:30):
get into peripherals like LG is probably well known, but
then some of their competitors are probably less known in
the space. So to list off a couple like internal
component manufacturers. Just for cooling a loane, you have a
company's named Thermal right, Thermal take, There's cooler Master. There's
a company called be Quiet Deep Cool, which is no
(13:52):
longer allowed to be sold in the US, which is
a different interesting story. Nocta is another huge one. So
they're all very important, but probably by and large the
way people know about them, if at all, is because
those parts that these companies make are put in the
pre built machines from a company like CyberPower, Ibypower, Dell HP.
(14:16):
And actually there's especially relating to the tariffs. There's something
really interesting that I didn't put in that video, and
I was thinking about it. So, factory relationships are an
interesting web in this industry where a lot of the
factories they're not owned by the manufacturers. So when we
talk about a brand, yeah like Height, Yeah, so Height
(14:36):
makes computer cases, coolers, keyboards. They don't actually own the factories,
but they work with them. And so there's contract manufacturing,
which is true in most industries. But what's interesting in
this one is those contract factories often are self branded
manufacturers as well, so they're competitors of their own customers.
A great example of this would be deep Cool. Have
(14:58):
you ever Did you ever hear Deep Cool? I don't
think so. Okay, So long story short, Deep Cole got
banned from the US, and that happened last year, but
there's still a good example for this. Deep Cool owns
factories in China. They do contract manufacturing, and they also
are a self branded company and the US they're no
(15:19):
longer sold that they were pretty big here. Deep Cool also,
I haven't stated this publicly, but it's known. I've been
in their factory, We've done videos. But what I haven't
said publicly is that they make products for a company
called be Quiet, which is a German based manufacturer. They
designed cooling components and cases and things like that, and
(15:40):
so some of their products in the past were made
by Deep Cool. Deep Cool is a competitor to be Quiet.
So these two companies that one sources from the other,
but they fight each other in the marketplace. And to
be clear, today I'm not sure if be Quiet so
they use is Deep Cool because of the US band.
But that's not important for this. What's important is that
(16:00):
where we have these tariffs coming into play, the factories
that are supplying their customers. I think the read I'm
getting is that they have more room to cut margin
or keep prices suppressed because there's not that middleman step.
So I think you're going to see this really interesting
thing to happen where some of these companies we spoke to,
(16:20):
including Cooler Master in the documentary Cooler Master's bringing in
four thousand pallets of computer hardware goods, which is an
absurd amount of stuff. And if they bring those in,
as other companies are kind of scared away from it,
there's going to be a sort of a vacuum forming
(16:41):
in the market, and depending on consumer confidence and purchasing,
they either end up filling that void where people can't
get other components, or if there's a price war later
because there's too much stuff that people brought in, then
the companies that are the factories I think would have
more room to fight on price.
Speaker 2 (17:01):
By the way, Tracy, so it looks like Deep Cool.
It's a Beijing based company and they got banned from
the US for the business dealing various business dealings in Russia.
Speaker 3 (17:11):
So just a little thank you, thank you Joe for
the context. Actually this reminds me so one thing I
wanted to ask is did you observe, I guess, any
differences between the larger companies that you spoke to and
the smaller companies, because I imagine, just on the factory's point,
the big guys probably have like solid relationships with their manufacturers,
(17:34):
and they probably have some ability to set prices or
negotiate prices with suppliers, whereas the little guys maybe they
don't have you know, as much room or as much
market power to try to negotiate on prices. Was there
much difference between the big and the small here?
Speaker 4 (17:53):
Oh yeah, yeah, the biggest difference was the ability to
move production all squere So some of these companies are
moving production to Vietnam, Thailand and other countries, mostly in Asia.
Sort of what we're seeing right now is that the
(18:14):
largest of the companies that either can build their own
factory or more likely just have a lot of leverage
with their suppliers, maybe they're the biggest customer of the factory,
they've been encouraging either existing factories that they work with
to open in other countries or they've been going to
factories in those other countries. So specifically in this industry, Vietnam, Thailand, Malaysia, Singapore,
and Taiwan are all pretty well tooled up. They already
(18:38):
have factories. They might be able to absorb some of
the excess billing out of China if companies are trying
to move their production. What wasn't on the list from
anybody that I spoke to was the US. So not
one of them said they're going to try and build
a factory in the US. But what was interesting is
that even those which can success, we move manufacturing out
(19:01):
of China and to say Vietnam indicated and expected thirty
to thirty five percent increase in their cost just from
the inefficiency, meaning that the lack of skilled manufacturing engineers
and the lack of pipeline maturity and the lack of
supply chain in that area will add overhead and as before,
potential tariffs on those countries. So the small companies, they
(19:24):
don't have the negotiating power. It's very difficult to get
a factory to make a highly complicated commodity product like
a computer case with all these special bends and LCD
panels and specially crafted fans and things like that. It's
hard to get a factory to do already. But to
then try and do it in a country where there
(19:45):
isn't necessarily the existing know how to do it or
the existing tooling to do it is basically an impossible
ask for a smaller company where they just don't have
the leverage, they don't have anything to offer, versus a
large company.
Speaker 2 (20:01):
I have to mention also that like a large company
presumably has customers outside of the US, and so many
of them prior to some extent, large swaths of their
business might not be affected by tariff. Square is like
a small, specifically US based company, you know. That's that's
the whole thing.
Speaker 4 (20:20):
Yeah, And that's an excellent point because one of the
things we ran into. You're talking about competitors being in
the room in the video we shot. Yeah, So one
of them. There's two companies. There's CyberPower and iy Power.
They're both in southern California, and they're actually basically on
the same street. Despite both having power in the name,
they are not related, and they both started around the
(20:43):
same time in the late nineties. But one of them
remained basically entirely focused on the US, and that's CyberPower PC.
The other one Ibypower, although their pre built PCs are
mostly focused on the US. They own a brand that's
called Height, which makes computer cases. And so this brand,
(21:04):
because it designs other components, it's successfully been able to
get into other markets worldwide. And this is a story
that's true for a lot of companies in the industry.
And so what they were telling us they thought was
really interesting was they're in this position where they don't
need to ship into the US anymore, and in fact
they decided not to and the reason for that was
(21:26):
the cost is too high, so it made more sense
for them to ship the goods elsewhere. So it might
hit the port in la but they might instruct the
forwarder to keep it on the vessel and send it
around again somewhere else. So what they're doing right now
is actually the product director in that video we spoke
with Rob Teller. He flew out to some other countries
(21:48):
and started trying to establish relationships to build the brand
and retailers outside of the US, whereas CyberPower coming back
to them. They really only sell to the US, but
they also assemble one percent of their computers in the US,
so they kind of get screwed in a way where
they don't have these external markets like you're talking about,
(22:13):
and they assemble it all here, but they don't make
the stuff that they put in the computer, so they
don't really have control over where it comes from. So
getting back to the company size disparity, you can wish
as much as you want that it comes from a
country with a lower tariff, or maybe even comes from
the same country you're in, but if you don't make it,
you don't really have any control over that.
Speaker 3 (22:34):
Yeah, And of course there's an irony that the company
which actually assembles stuff in the US is getting punished
more than more than some other companies. There's another business
that I wanted to ask you about specifically, and it
is a logistics company that people use to actually, you know,
transport stuff. It's called Straightforwarding, which is a great name
(22:56):
for like a male company. But what are they see
right now in terms of actual shipping volumes.
Speaker 4 (23:04):
So when we were talking to them, it would have
been probably second week of April, I think, and what
they were starting to see is that customers were indicating
concern of the tariff. So this is just to put
into perspective. The time I spoke to them, it was
one day before the exemptions were announced, and therefore two
(23:28):
days before the exemptions were kind of unannounced.
Speaker 2 (23:31):
I remember that weekend, yeah, yeah.
Speaker 4 (23:33):
Yeah, yeah, And then it was a day or two
after the most recent round of tariffs, and so that
at that time the highest general tariff. Of course, it's
different depending on the classification of the good. The highest
general I think they quoted at one hundred and seventy
percent depending on how you count the previous administration. So
what they were seeing was a lot of customer I mean,
(23:54):
he just confirmed panic was the word I used, and
he confirmed that word where they're customers were panicked about
the pricing and about the uncertainty of what's the tariff
going to be and if it goes away, can we
get a refund? As far as shipment volume. In the
time since talking to them, there's been a reduction of
(24:15):
volume into the port in LA in particular. I think
I actually saw a Bloomberg report about that, So you're
probably more informed than I am on the specifics of it,
but I think I read there was a year over
year reduction anticipated for next week of correct me if
I'm wrong with something like thirty five percent. Does that
sound right?
Speaker 2 (24:33):
It sounds yeah.
Speaker 4 (24:36):
Yeah, So I think that's the number I read this morning. Anyway,
what they're seeing is potential reduction and import which means
reduction need for people who do that job, and you know, couriers,
anyone in that whole chain warehousing. There's a ton of
warehousing in City of Industry in California, and they're going
to be impacted for.
Speaker 2 (24:58):
Sure, stepping back, even sitting aside the tariffs, what are
gamers looking for when they buy, Whether it's say a tower,
(25:21):
like you know, I know, there's some part of its design,
and then cooling I imagine sort of keeps it alive
and healthy. For high quality cooling keeps it alive. And
then there's purely you know, high performance gear for the
best gaming experience. Like what does your viewer, what do
they want and what are they benchmarking various options against
(25:41):
each other on what specs?
Speaker 1 (25:43):
Sure?
Speaker 4 (25:44):
Yeah, so our viewers tend to build their own computers,
so you call it DIY right through it yourself PC
building and for anyone who hasn't done it, it's really fun.
It's pretty easy. It's like putting together legos, except with
way fewer pieces. But typically a shop first, based you
say your budget, you have an idea of what you
might want to spend. The first two components people are
(26:06):
pricing out are normally the CPU and the GPU. Those
drive the performance of the computer. So a lot of
people in our audience will work on the same computer
they game on. So those users might be using something
like Adobe Audition, which I just learned you all use
for this podcast or Adobe premiere or a photoshop and
so like just these three Adobe solutions alone depend which
(26:29):
one it is, they could be very CPU or very
GPU intensive, and the same is true for gaming, so
people tend to speck out the GPU and the CPU first,
something like cooling. I guess to name the components. There's
cooling for the CPU, there's a case, power supply, motherboard, RAM,
and typically a solid state storage device or an SSD.
And so these are the core components. The ones that
(26:51):
are more commodities would include the case potentially the cooling
or what people are starting to go for if they
have a little more budget is some kind of looks focus.
So I mean, you can make computers look really cool
these days, and yeah, and so there's a lot of
that too, where it's it's all I mean, it's really
not that different in concept from car customization, where there's
(27:15):
people who want performance and there's people who want fashion, right,
and then there's people who want both, and there's the
ones who spend the most money on it. But yeah,
generally speaking, what they're looking for is a high frame
rate to make the gaming experience feel fluid. They want
to be able to render the graphics at the highest
quality settings with the most polygons and geometry and the graphics.
And if they do work on the side, then they're
(27:37):
trying to balance the parts within the system, meaning they
want to evenly distribute the money in a way that
optimizes for what each application wants so that they can
run those outside applications that might be core intensive versus
say memory intensive or something.
Speaker 3 (27:56):
Joe, do you remember that old show Pimped My Ride, Yeah,
where they did make yeah, we need to like pimp
my computer kind of thing where the Yeah, I would
I would actually watch.
Speaker 4 (28:08):
Yeah, I could watch. There was. There is a another
YouTuber in the space, Jay's two Cents, who basically did
that for Terry Crews. Actually hasn't the actor? Yeah, yeah,
it built them a game in PC.
Speaker 3 (28:23):
Very cool. Talk to us a little bit more about pricing,
because it sounds like everyone agrees that the tariffs are
going to be the cost is going to be borne
by the American consumer, and so prices are going to
have to come up. But also when we're talking about
tariffs that are almost you know, two hundred percent in
some cases, it feels like that is such a significant
(28:47):
increase that You're also going to see volumes fall and
demand destruction, which normally would pull prices down, but I
guess everything is just so different this time. It's it's
kind of hard to gauge what's actually going to happen
to prices and how companies are actually dealing with that.
Speaker 4 (29:05):
Yeah, I think it could pull prices down eventually in
the short term, though, I mean, if their options are
losing hundreds of dollars per device or letting it sit
on a shelf, I think right now there's not enough
pain to well for most of them anyway to take
that hit just to liquidate whatever they can. So pricing,
(29:26):
I think it's pretty safe to say it's going to
go up. They've told us as much, most of these companies,
and yeah, I think what we're going to see happen
is an initially increasing price for the companies that are
still bringing products to the US, because not all of
them are, and as the tariffs change, I mean, if
they come down. This is a personal opinion, but I
(29:47):
don't think the prices are going to come down in
step with a tariff's production, at least not without some
kind of really severe market force, such as people just
stop buying stuff because I just don't see a reason
the companies would do that. They're going to have inventory
where they already paid import costs. Maybe they can get
a government refund, maybe they can't. They are worried about
(30:10):
the decrease and the value of their money, and they
may also just feel like they need to shore up
more profit, you know, to be a little safer. So
I really don't see pricing coming down anytime soon unless
there's just there's zero demand left and they get desperate.
But in terms of increases, so it's not linear. So
this is pretty interesting where one of the things I
(30:30):
learned talking to the companies was about the retail side.
I knew nothing about how this worked before. And retailers,
so one of the biggest ones in the US is Microcenter,
and they are like a highly specialized best buy. I mean,
if you do DIYPC building, they're your number one physical choice.
The etailers would be like New Egg or Amazon. And
(30:52):
what we learned is that some of these retailers, like Microcenter,
have very rigid margin demand, and so for computer cases,
for some of the companies we spoke to, the margin
demand is about twenty five percent and that means these
case manufacturers are often making less than just in terms
(31:13):
of percentage or even dollar amount, especially if they want
to get microcenter shelf space. Correct. Yeah, okay, yeah, so
that secures the shelf space. And I think under typical conditions.
I've had companies bad mouth retailers to me privately before
and ask us to keep it off record or not
share it at all. I've never had them on camera
(31:34):
just straight up say you know, the retailers are making
more money than us, and then express their discontent at
retailers being unwilling to budge on their own margin requirements. Interestingly,
what they told us was that Amazon was a little
more willing to have some flexibility, which maybe they're just
big enough, right, they have enough categories where they can
(31:55):
it might be an opportunity for Amazon to try and
soak some of that supply from these smaller retailers. But
the question is if a three hundred and sixty dollars
computer case that has all these bells and whistles now
has to be sold for six hundred to seven hundred dollars,
which is what the companies were telling us as an example,
(32:18):
will a consumer actually pay for that? And when they
don't what happens at retail, is it? You know, I've
seen plenty of headlines about empty shelves. I really don't
think that's just hyperbole. I think there's real chance of that,
especially in niche industries like this one.
Speaker 2 (32:35):
Yeah, so get you know, Let's say, you know, my
son isn't old enough yet, thankfully to be a hardcore gamer,
but it's probably a matter of years because I see
how much he like screens of all sorts.
Speaker 3 (32:47):
I wonder where he gets that from.
Speaker 4 (32:48):
Yeah, right, right, it's my It is my fault.
Speaker 2 (32:50):
But let's say, you know, I you know, it's later
in the year and I'm like, okay, I want to
buy him a Christmas present for the gamer in your
family or in anyone's family. What do you think this
Christmas looks like in terms of higher prices and diminished
variety of options?
Speaker 4 (33:05):
Yeah, the reduced variety is a big one, because if
you're consolidating your order volume, you're reducing your order volume,
you might have to consolidate the skews, right, so suddenly
the fifteen hundred units of red become fifteen hundred more
units of black computer cases, and so that definitely would
(33:27):
reduce I think the choice, or at least the variety,
like you're saying pricing. I mean, if someone really as reviewers,
our recommendation right now to the consumer very focused on
sort of consumer first, And to me it's like, I
wouldn't buy unless I know I really want the upgrade
(33:47):
or need it, maybe for work or just the computers
on its last legs. And if I were going to buy,
it would probably be now. But I think the greater
thing to consider there, at least in our recommendations, is
trying to remind people of hey, you know, if you're
not so sure about your job prospects, then it and
you really don't need it, then maybe hold onto the money,
(34:08):
which none of the companies want to hear us say,
but you know that's I think that's probably the responsible
thing to say. For Christmas or holidays. Yeah, I I
would imagine there'll be some pain, I think the lower end.
So here's where it gets interesting. The lower end components
would typically be where people would be directed in a
time like that, if prices are coming up, you go
(34:28):
for lower end. A percent increase on a cheaper product
doesn't feel as bad as a percent increase on an
expensive product just by the math of it. The problem
is right now, there's not a lot of cheap products
silicon in the gaming or the consumer space, So if
you want.
Speaker 2 (34:47):
Why allocate silicon capacity when you could be selling to
AI data centers anyway? Sorry, keep going.
Speaker 4 (34:51):
Exactly No, I mean that's exactly right. Yeah, it's and
like Intel, for example, with its GPUs, they have a
small GPU effort and consumer they've been pushing. One of
the people at Intel stated to me in the past,
we should be wrapping these and dollar bills when we
shift them out the door, because they're fighting so much
on the pricing with n video and am D that
(35:15):
it feels like they're losing money, and they might well be. Unfortunately,
they are not well established yet and they're the only
ones who offer a cheap ish video card for gaming,
And so you're left with this price creep where all
the video cards have pretty much moved up towards these
higher price classes. They've cut down what you get for
the dollar, which's lower memory capacity. Part of that is
(35:39):
product segmentation where companies like ndvideo recognize, like you said,
if I have a user who wants thirty two gigabytes
of memory, on the video card, they probably want to
use it to make money, and so if I'm on video,
I should make money because they're going to make money, right,
So you segment that, and then the consumer is left
with things that are less viable. They have less longevity,
(36:02):
so they won't age as well with the gaming graphics improvements,
and causes kind of a circle of buying hardware sooner
because it's gotten too unobtainable to go up to the
high end where you might have that longer, that better longevity.
Speaker 3 (36:18):
So I just have one last question. Obviously, the stated
goal of the tariffs is to move manufacturing production to
the States. Did any of the companies that you actually
spoke to talk about this as a possibility, and what
are the sticking points other than the time frame of
building a new factory, what are the sticking points or
(36:40):
the challenges in actually making more stuff in the US.
Speaker 4 (36:44):
Almost all of them indicated that this is not a
possibility anytime in the near future. There's one exception, which
is a company we spoke to called Proto Case, and
proto Case is part of a another company that makes
enterprise and server equipment called forty five drives, And so
these companies. They are headquartered in Canada, and for the
(37:08):
last twelve years, the owner was telling us or the
co founder, I should say, they were looking at it
opening a plant somewhere in the US for assembly and
for some light manufacturing, and so they've done that. They're
the only ones who've kind of gone that direction, but
they were already going that direction. And their whole business
model is speed, So if you need something, they can
turn it around a couple days, whereas if you need
(37:30):
a lot of something, you might be waiting months. Everyone
else basically said that it's it is not feasible to
bring manufacturing into the US for the products that they sell,
and a lot of that comes from supply chain. So
the best way for me to contextualize it as a motherboard.
A motherboard is roughly a one foot by one foot
(37:53):
board that goes right in the middle of your computer.
The CPU sockets into it, the GPU sockets into it,
the RAM goes in it. You can think of it
kind of like the brains down of the computer, and
a high end motherboard for a workstation or whatever. High
end gaming PC has somewhere between eighteen hundred and three
thousand individual components on it, so these are they get
really small? Yeah, And so these components come from all
(38:17):
over the place. So a motherboard factory is a service
mount technology line, it's called an SMT line to mostly
automatically pick and place components onto the board, and it's
pulling those from normally reels like drums, almost like a
film reel of components. And those reels of components come
from other companies, which come from other companies, And so
(38:39):
you have a factory supply chain to make one part
of one computer that might go, depending on how you
want to count it, one hundred factories deep, or if
you look at just sort of the big components after
they've come from raw materials and things like this, you're
still at maybe ten to thirty factories. And that's just
to make one part of one computer. Incredible, and so
(39:01):
the challenge that all the companies enumerated to us was,
you can bring the SMT line to the US and
you can stamp these components down on it. You're gonna
buy those components from somewhere else, and it's gonna be Vietnam, Thailand, China,
mostly China, Taiwan and so forth. But if there's tariffs
on those parts which are about us. You know, they're
(39:24):
not literal raw materials, but they're pretty close in the
computer world, then you still face all the same challenges
as before. So those would also have to come over
to America. And then now you're bringing in capacitor supply
or metal supply or rare earth metals, and pretty much
no matter where you look, you're bringing something in from someone.
(39:45):
And and so I think it's just the challenge of
what was stated to us was there needs to be
a plan with kind of hard timelines of here's our
target to move this industry's manufacturing by this date, and
just flipping a switch it just seems to cost too
much chaos there. You know, people would be timid to
(40:05):
invest in a factory in the US that might take
several years to build if they're not sure what's going
to change tomorrow.
Speaker 2 (40:14):
I just have one last question too, And I sort
of have this nagging feeling that I might be stepping
into a gamer landmine.
Speaker 4 (40:22):
But I literally don't know at all.
Speaker 2 (40:25):
Why not just you know, all this stuff. It feels
the idea of having to worry so much about the
specs on your own computer sort of feels retro I
just do every all my work in a browser. Why not,
just like the whole industry, go to cloud gaming and
not have to worry about the spinning disk in your home?
Speaker 4 (40:41):
Oh you're hurting me?
Speaker 2 (40:42):
Yeah, in one minute or less. No, let's tell like,
could there be a shift to cloud gaming? I don't
know say about that? What are the constraints? Why not
on Netflix for gaming or whatever?
Speaker 4 (40:52):
Sure? The shortest possible answer I have is latency and
control or customization so as quickly as possible. I mean
latency is the responsiveness between your input and what happens
on the screen, and going through networking infrastructure, you might
be at two times longer three times longer latency, meaning
(41:14):
that when you push the button on the controller or
the keyboard, you don't see that action until a perceptibly
long difference versus if you played it locally. The other
issue is the concern on the consumer side of you
own nothing, right, and the more you own nothing I
think kind of the more uncomfortable, certainly, and I think
(41:37):
most of our audience gets with the product in general.
And then the last concern is just that customization, where
it may be a somewhat equivalent would be why if
you can rent a car for about the same price
as buying a car, why would you buy a car.
There's a lot of reasons. One is external forces. You
have no control over that car. What if they want
(41:57):
it back, what do you do right? You like car,
they take it back. Or in the gaming world, if
they just decide this game is not going to be
available anymore, kill the license. It's gone, and you're talking
about something that people have a very deep emotional connection with.
It can just be snapped out of existence. So plus
the customization, I mean, it's really fun to build a computer.
(42:18):
So that's my quick version.
Speaker 2 (42:19):
Our producer Dash says, I asked a new question there,
Steve Burger gamers next is it's a really phenomenal work
that you put together. I really would encourage all the
listeners to go check it out. And thank you so
much for coming on off off.
Speaker 4 (42:32):
Thank you it was fun. Tracy.
Speaker 2 (42:46):
I think it was one point in my life, maybe,
like I don't know, twenty ten, i'd gotten my idea
I should build a computer.
Speaker 4 (42:53):
I never did it, but.
Speaker 3 (42:54):
You were going to say you should get into gaming.
Speaker 4 (42:57):
No, I should not get into gaming.
Speaker 5 (42:58):
I thought it might be fun, and there's like, I
don't know, but it does seem it does seem cool
to build your own computer. I imagine, yes, the thing
is all I do is tweet an email, and I
really cannot.
Speaker 3 (43:09):
Justify, Like you want to get your hands dirty.
Speaker 4 (43:12):
No, I do.
Speaker 2 (43:12):
Kind of it seems cool, but I can't really justify
it because I don't do anything this particularly computing intensive.
Speaker 3 (43:17):
All right, well, let me know if you decide to,
you could do like a pie or something like that.
There's so many interesting things to actually pull out of
that episode, But I guess the big one for me
is the question of where does the pain of tariffs
actually land. And I know everyone's expecting higher prices at
(43:38):
this point for consumers, but there are still all these
additional layers where you could see companies or other entities
kind of absorb the costs. And so it was really
interesting when Steve was talking about microcenter and margin demand
of twenty five percent and the frustration of people that
actually make things that the retailers aren't necessarily budgeting on
(44:00):
the margins that they want to see at their stores.
That's really interesting, And I guess the question is if
things get really bad, do the retailers start to move
on that.
Speaker 2 (44:10):
There's so many interesting micro and macroeconomic stories that you
could take out of this one industry, including who bears
the pain, who eats the margin? The question you asked
about the difference between large and small companies and the
risks that they can take. Obviously, you know, the web
of supply chain just extraordinary complex, and the uncertainty and
(44:33):
how even one piece of moving manufacturing back would require
like multiple different kinds of factories. I just thought that
was like incredibly interesting. It's also sort of interesting this industry.
I think part of the reason I was curious. You know,
one of the stories in politics, of course, is the
incredible success or the surprising success that Trump had with
(44:53):
sort of young men in particular. And so when I
think about an industry in which my guess is that
many of the people in this space have drifted more
towards that side of the aisle over the last several years.
And then now, you know, I don't know for sure
how the gamer audience voted, but I suspect that there's
a pretty solid Trump contingent in there. And so this
(45:13):
is just going to be, you know, it's gonna be
interesting to see the reaction.
Speaker 3 (45:16):
I imagine there's going to be a lot of coverage of
this issue in the gaming community, so we'll have to
watch out for it. Maybe have Steve back on the show.
Speaker 4 (45:23):
Yeah. Absolutely.
Speaker 3 (45:24):
Shall we leave it there for now?
Speaker 4 (45:25):
Let's leave it there.
Speaker 3 (45:26):
This has been another episode of the aud Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (45:31):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow Steve Burk's coverage at gamers Nexus. Follow our producers
Carmen Rodriguez at Carman armand dash El Bennett at Dashbot
and Kilbrooks at Kilbrooks. For more Odd Lots content, go
to Bloomberg dot com slash odd Lots. We have a
daily newsletter and all of our episodes, and you can
shut about all of these topics twenty four to seven
(45:53):
in our discord where we even have a gaming subchannel
that's discord dot gg.
Speaker 4 (45:57):
Slash out Lots.
Speaker 3 (45:58):
And if you enjoy Odd Lots, if you like it
when we talk about computer games and the supply chain
of PCs, then please leave us a positive review on
your favorite podcast platform. And remember, if you are a
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the Bloomberg channel on Apple Podcasts and follow the instructions there.
(46:19):
Thanks for listening.
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Locked Podcast.
Speaker 3 (00:22):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:25):
Tracy, this has come up on the podcast. But one
of the things with the tariffs is I still think
for the most part, people are talking about them from
like a fiscal standpoint, which is, Okay, prices are going
to go up, What is that due to inflation? What
does that due to sales? What is that due to employment?
And less about the potential for like actual economic chaos
(00:46):
because something isn't getting to somewhere else that.
Speaker 4 (00:48):
It needs to be.
Speaker 3 (00:49):
You want to go more micro instead of the macro.
Speaker 4 (00:52):
Yeah, okay, I'm good with that.
Speaker 2 (00:53):
We can talk to economists all day and they all
have their estimates, et cetera. But you know, there's a limit.
Speaker 3 (00:58):
To you know, I think we should so one of
the things we obviously learned during the pandemic is like,
real things exist in the world, and they have to
come from someplace where they're made and be shipped over
and if there are disruptions, then those can snowball in
quite a big way. And there's one product in particular
(01:18):
that I think kind of embodies a lot of what
we talk about when it comes to tariffs and manufacturing
and disruptions, and that's computers right totally. And if you
look at one of those supply chain graphics for computers,
it's just a bunch of lines crisscrossing the world, basically,
like the raw materials coming from Africa or South America
(01:39):
going over to China, and then chips being made in Taiwan,
and then all of those components heading over to the
US where they're put together. It is extremely complex, and again,
like you look at it on a map, it just
looks like a spider web.
Speaker 2 (01:53):
It's a total spider web, because then the chips get made,
and then they go to Malaysia for packaging, and then
they go back to somewhere I skipped up. I think
a lot of people like this idea of reshoring more tech,
and that's obvious. We saw it during the Biden administration
and various efforts on chips et cetera. But it certainly
can't be done overnight. Certainly, And you know again because
(02:17):
as you say, it's this such intense spider web, you know,
it's not even as simple as like, oh, let's move
it from China to the US or something like that.
Speaker 4 (02:25):
It's just so.
Speaker 2 (02:25):
Many different links and parts of what's assembly and packaging
and components and all that, et cetera, that you're going
to announce a new set of tariffs one day and
then an industry will just like digest those tariffs and
then you.
Speaker 3 (02:37):
Know, put them up a US factory the next day, or.
Speaker 2 (02:40):
Put a little markup on it. It's like, okay, you
know whatever, here's the tariff raid. It is twenty five percent.
You know, add twenty five percent to what we sell,
to the selling price. Like the idea that it could
be that simple is uh kind of unrealistic.
Speaker 3 (02:53):
We should talk about it. Let's get granular, Okay.
Speaker 2 (02:56):
So I am very excited. We are going to be
speaking with Steve Burke. He's the editor in chief of
a publication YouTube channel, et cetera called Gamers Nexus. They
do a lot of technical coverage of computer hardware, et cetera,
which is a world that I basically know nothing about.
Speaker 4 (03:12):
I don't know much about gaming.
Speaker 2 (03:14):
I know that gamers, you know, they buy their own chairs,
and they buy their own speakers, and they buy you know,
decked out cooling towers. So that they could play, you know,
super high speed. But I really don't know much about it.
But Steve and his team at Gamers and Nexus about
a week ago, actually two weeks ago, I think it
was April fourteenth, put out an insane documentary, three hour
(03:36):
long documentary on YouTube called the Death of Affordable Computing
and the tariffs impact on the world of gaming Hardware.
It's a truly extraordinary piece of journalism, and we wanted
to talk to the creator behind it and what he
did and what he learned. So Steve Burke, thank you
so much for coming on Odd Lots.
Speaker 4 (03:54):
Oh thanks for having me. Yeah, I'm excited.
Speaker 2 (03:57):
When Tracy and I do an episode of the podcast
talk about terriffs. We're worried that it's going to be
out of date and irrelevant by the very next day.
And that's just like a forty minute conversation sometimes with
like one economist. Just tell us, how did you quickly,
within basically twelve days of quote liberation day unquote, put
together and what did you put together this three hour
(04:18):
documentary about this world of computer hardware, gaming hardware? What
is what was this project?
Speaker 4 (04:24):
It was fun, I mean, it was born from chaos
and so for us, the moment we pulled the trigger
on it was when the use the formal name, the
reciprocal traps as they are called, were put in place.
And so basically immediately as soon as that happened, I
called a bunch of companies I worked with over the
last sixteen years and everybody was ready to go on record,
(04:46):
which is very rare, as I'm sure you all know,
and we booked the flights for twelve hours from that moment.
Wow got on the plane without a return flight and
just went out and started talking to people. So it
was a The underlying concern of this will all be
out of date was definitely there. Our approach to that was,
(05:07):
if we tackle this story in a way where it's
partly about that, if it's about the uncertainty and about
the story of getting the story, that resolves some of
those concerns, because then what you're capturing at least is
the sort of real feelings and the real decision making
that these companies are doing at any given moment.
Speaker 3 (05:27):
Yeah, and at the very least people will learn about
the supply chain of PCs, so you always have that
aspect of it. It seemed like people and again you
spoke to dozens of companies here, but it seemed like
people really wanted to talk about all of this, and
in fact, I think you got some like competitors all
together in a room to have a conversation about how
(05:49):
they were all thinking and dealing with potential tariffs.
Speaker 4 (05:53):
That's right.
Speaker 3 (05:54):
People want to come on and talk about this, which
really highlights the urgency here.
Speaker 4 (05:59):
Yeah, So the biggest challenge that a lot of them
are facing is I think they're concerned about what the
consumer perception will be as prices go up or as
stock drives out. And there's good reason for that. I mean,
consumers absolutely are are kind of Number one coverage angle
is his cynicism. You know, it's being really critical of
(06:22):
what the companies are saying at a given point. This
was an interesting scenario though, where the price increases are
functionally guaranteed in this industry, and I think what the
companies we're worried about is if we're not transparent right
now when we have this opportunity, then people won't necessarily
(06:42):
believe us when we explain why the prices went up.
And you know, consumers, to be clear, should still remain
cynical to a healthy degree, but but should also be
aware that there are real world impacts you know, from
these decisions that are much bigger than any of the companies.
Speaker 2 (06:57):
So no, that actually makes a ton of sense. Why
it would be strategic for these companies to talk about
the real impact so that when they raise the price
of whatever, that people understand. Why but actually talk about this,
setting aside the tariffs, what is this industry? Talk to
us about the existing gamer hardware industry that you set
(07:17):
out to describe.
Speaker 4 (07:18):
In this documentary.
Speaker 2 (07:19):
Oh sure, who are these players? And like where do
they sit? And you know, what do they sell? What
kind of products? You know, give us an overview of it.
Speaker 4 (07:25):
Yeah, So I think the most important thing for anyone
who doesn't pay close attention to it is to be
aware that computer gaming hardware is used in workstations and
scientific computing around the world. So companies that everyone in
your audience would already be aware of, like Nvidia, Intel,
AMD so forth, all the stuff they make for scientific
(07:48):
computing and AI and data center, a lot of that
stuff also exists in some capacity in gaming, and it's
it's potentially the same supply as in the same way
for supply. If it's silicon or shares at least the
architecture of whatever that generation of product is using. And
so there's a lot of crossover. And what that means
(08:09):
is that these multiple technology industries all sort of prop
each other up. You get economies of scale across them.
Because if you're making the wafer that can be used
in a data center card and can also be used
in a gaming card, right, the company has some more
strategic levers to pull for where do they want this
particular chip to go, Which market has demand, has one
(08:31):
dried up, they can move that supply over to something
else and market up more if it's has good yield.
So it's a huge industry. And then as far as gaming,
I don't have the exact numbers off the top of
my head anymore, but not too long ago we received
a press briefing from one of the big three, Intel
and Video or AMD, I don't remember which, but talk
about the sort of worldwide gaming audience PC gaming depend
(08:53):
on who you look at, it's anywhere in the very
high hundreds of millions to the low billions of individuals
who do some form of PC gaming. So it's a
huge industry.
Speaker 3 (09:04):
So you know, Joe's first question was about all the
uncertainty over the tariffs themselves and the fact that we
don't know what's going to happen tomorrow, maybe there's another announcement,
and then maybe the day after there's some backtracking on it.
It seems really difficult to plan for tariffs coming in
when you don't even know what exactly they're going to
look like, or you know when they might actually be
(09:26):
phased in. What were companies actually saying about their plans
for handling this so far?
Speaker 4 (09:32):
So the plans are interesting. The number one thing they
were telling us is that it's difficult to plan when
the plan potentially changes on a daily basis. So a
number of the companies we spoke with, including an Austin,
Texas based repair shop run by a guy named Lewis
Rossman who's kind of well known for Right to Repair
Course Air, which is a huge publicly traded company, so
(09:54):
like you have this huge range, and generally speaking, the
message we received was we can deal with a high tariff,
what we can't deal with is uncertainty. So I don't
know if the timelines are maybe interesting for people, but
just to give an idea for things without even getting
(10:16):
into the discussion of where is the thing made, The
question of how long does it take to make the
thing is maybe kind of colors you know, where their
strategic decision making is coming from. So a silicon wafer
takes maybe about three months to produce, assuming they don't
run a hot lot, and so that's just to kind
of make the wafer. It might be an EID or
(10:36):
a twelve inch wafer that then contains all the silicon
that eventually goes into a computer. So wafer is just
a disc, right, It looks like a CD basically, and
they pattern the silicon on it in a fab. So
Intel has fabs they're building some of the US as
an example, and they then dice that they send it
(10:58):
out to packaging to test to eventually turn into a
finished CPU or GPU that goes on a board and
gets put in a computer. Just to make the wafer,
it's about three months. And so when you're making decisions
that involve macroeconomics, not that I'm not an expert on
that part of it, but you could imagine that it
(11:19):
would be very difficult right to plan how many of
these things you might need. And that's just one part
the computer cases are typically twelve to eighteen months counting
the design stage to get through mass production. The actual
mass production part of it, they might order about four
to maybe six months in advance of when they need
the parts, depending on where Chinese New Year falls in
(11:40):
that window. And so these types of numbers I think
probably you know, give a better indication as to why
it's so difficult to project, because the decisions they're making
now are based off of inventory they placed orders for
at the end of last year.
Speaker 2 (12:10):
You know, I've never been a PC gamer, or really
a gamer of any sort. When I think about computers,
you know, have a I have a Macus or you know,
some laptop, I forget which one, and I run my
Bloomberg terminal on a computer made by Hewlett Packard or
and I think I have a webcam, probably made by Logitech.
When we're talking about the world of the hardware that
(12:31):
you cover, what does the constellation look like of different
players and what the role that they play, Because yeah,
again I'm familiar with Intel, AMD and Video and some
of the popular consumer facing names. But who are the
big names and what do they do that a hardcore
PC gamer would.
Speaker 4 (12:47):
Be thinking about. Yeah, there's a ton of them, so
as you've probably heard of. That's how I'm familiar, I think,
so yeah, yeah, yeah. So there's companies like Asus as
an example, which is one of the larger ones, and
they did just about everything, so they all symbol computers.
They also make motherboards. There's some scare quotes around that
make I'll maybe come back to, and they make video
(13:08):
cards all this sort of type of thing. Laptops. MSI
is another one. Course, Seria is huge. So these three
have just named they're all massive in the space. They're
billion dollar companies. You also have hundreds of smaller ones.
So just to ratle off a few, but Cooler Master,
Height Crucial is actually larger, owned by Micron, and you
(13:30):
get into peripherals like LG is probably well known, but
then some of their competitors are probably less known in
the space. So to list off a couple like internal
component manufacturers. Just for cooling a loane, you have a
company's named Thermal right, Thermal take, There's cooler Master. There's
a company called be Quiet Deep Cool, which is no
(13:52):
longer allowed to be sold in the US, which is
a different interesting story. Nocta is another huge one. So
they're all very important, but probably by and large the
way people know about them, if at all, is because
those parts that these companies make are put in the
pre built machines from a company like CyberPower, Ibypower, Dell HP.
(14:16):
And actually there's especially relating to the tariffs. There's something
really interesting that I didn't put in that video, and
I was thinking about it. So, factory relationships are an
interesting web in this industry where a lot of the
factories they're not owned by the manufacturers. So when we
talk about a brand, yeah like Height, Yeah, so Height
(14:36):
makes computer cases, coolers, keyboards. They don't actually own the factories,
but they work with them. And so there's contract manufacturing,
which is true in most industries. But what's interesting in
this one is those contract factories often are self branded
manufacturers as well, so they're competitors of their own customers.
A great example of this would be deep Cool. Have
(14:58):
you ever Did you ever hear Deep Cool? I don't
think so. Okay, So long story short, Deep Cole got
banned from the US, and that happened last year, but
there's still a good example for this. Deep Cool owns
factories in China. They do contract manufacturing, and they also
are a self branded company and the US they're no
(15:19):
longer sold that they were pretty big here. Deep Cool also,
I haven't stated this publicly, but it's known. I've been
in their factory, We've done videos. But what I haven't
said publicly is that they make products for a company
called be Quiet, which is a German based manufacturer. They
designed cooling components and cases and things like that, and
(15:40):
so some of their products in the past were made
by Deep Cool. Deep Cool is a competitor to be Quiet.
So these two companies that one sources from the other,
but they fight each other in the marketplace. And to
be clear, today I'm not sure if be Quiet so
they use is Deep Cool because of the US band.
But that's not important for this. What's important is that
(16:00):
where we have these tariffs coming into play, the factories
that are supplying their customers. I think the read I'm
getting is that they have more room to cut margin
or keep prices suppressed because there's not that middleman step.
So I think you're going to see this really interesting
thing to happen where some of these companies we spoke to,
(16:20):
including Cooler Master in the documentary Cooler Master's bringing in
four thousand pallets of computer hardware goods, which is an
absurd amount of stuff. And if they bring those in,
as other companies are kind of scared away from it,
there's going to be a sort of a vacuum forming
(16:41):
in the market, and depending on consumer confidence and purchasing,
they either end up filling that void where people can't
get other components, or if there's a price war later
because there's too much stuff that people brought in, then
the companies that are the factories I think would have
more room to fight on price.
Speaker 2 (17:01):
By the way, Tracy, so it looks like Deep Cool.
It's a Beijing based company and they got banned from
the US for the business dealing various business dealings in Russia.
Speaker 3 (17:11):
So just a little thank you, thank you Joe for
the context. Actually this reminds me so one thing I
wanted to ask is did you observe, I guess, any
differences between the larger companies that you spoke to and
the smaller companies, because I imagine, just on the factory's point,
the big guys probably have like solid relationships with their manufacturers,
(17:34):
and they probably have some ability to set prices or
negotiate prices with suppliers, whereas the little guys maybe they
don't have you know, as much room or as much
market power to try to negotiate on prices. Was there
much difference between the big and the small here?
Speaker 4 (17:53):
Oh yeah, yeah, the biggest difference was the ability to
move production all squere So some of these companies are
moving production to Vietnam, Thailand and other countries, mostly in Asia.
Sort of what we're seeing right now is that the
(18:14):
largest of the companies that either can build their own
factory or more likely just have a lot of leverage
with their suppliers, maybe they're the biggest customer of the factory,
they've been encouraging either existing factories that they work with
to open in other countries or they've been going to
factories in those other countries. So specifically in this industry, Vietnam, Thailand, Malaysia, Singapore,
and Taiwan are all pretty well tooled up. They already
(18:38):
have factories. They might be able to absorb some of
the excess billing out of China if companies are trying
to move their production. What wasn't on the list from
anybody that I spoke to was the US. So not
one of them said they're going to try and build
a factory in the US. But what was interesting is
that even those which can success, we move manufacturing out
(19:01):
of China and to say Vietnam indicated and expected thirty
to thirty five percent increase in their cost just from
the inefficiency, meaning that the lack of skilled manufacturing engineers
and the lack of pipeline maturity and the lack of
supply chain in that area will add overhead and as before,
potential tariffs on those countries. So the small companies, they
(19:24):
don't have the negotiating power. It's very difficult to get
a factory to make a highly complicated commodity product like
a computer case with all these special bends and LCD
panels and specially crafted fans and things like that. It's
hard to get a factory to do already. But to
then try and do it in a country where there
(19:45):
isn't necessarily the existing know how to do it or
the existing tooling to do it is basically an impossible
ask for a smaller company where they just don't have
the leverage, they don't have anything to offer, versus a
large company.
Speaker 2 (20:01):
I have to mention also that like a large company
presumably has customers outside of the US, and so many
of them prior to some extent, large swaths of their
business might not be affected by tariff. Square is like
a small, specifically US based company, you know. That's that's
the whole thing.
Speaker 4 (20:20):
Yeah, And that's an excellent point because one of the
things we ran into. You're talking about competitors being in
the room in the video we shot. Yeah, So one
of them. There's two companies. There's CyberPower and iy Power.
They're both in southern California, and they're actually basically on
the same street. Despite both having power in the name,
they are not related, and they both started around the
(20:43):
same time in the late nineties. But one of them
remained basically entirely focused on the US, and that's CyberPower PC.
The other one Ibypower, although their pre built PCs are
mostly focused on the US. They own a brand that's
called Height, which makes computer cases. And so this brand,
(21:04):
because it designs other components, it's successfully been able to
get into other markets worldwide. And this is a story
that's true for a lot of companies in the industry.
And so what they were telling us they thought was
really interesting was they're in this position where they don't
need to ship into the US anymore, and in fact
they decided not to and the reason for that was
(21:26):
the cost is too high, so it made more sense
for them to ship the goods elsewhere. So it might
hit the port in la but they might instruct the
forwarder to keep it on the vessel and send it
around again somewhere else. So what they're doing right now
is actually the product director in that video we spoke
with Rob Teller. He flew out to some other countries
(21:48):
and started trying to establish relationships to build the brand
and retailers outside of the US, whereas CyberPower coming back
to them. They really only sell to the US, but
they also assemble one percent of their computers in the US,
so they kind of get screwed in a way where
they don't have these external markets like you're talking about,
(22:13):
and they assemble it all here, but they don't make
the stuff that they put in the computer, so they
don't really have control over where it comes from. So
getting back to the company size disparity, you can wish
as much as you want that it comes from a
country with a lower tariff, or maybe even comes from
the same country you're in, but if you don't make it,
you don't really have any control over that.
Speaker 3 (22:34):
Yeah, And of course there's an irony that the company
which actually assembles stuff in the US is getting punished
more than more than some other companies. There's another business
that I wanted to ask you about specifically, and it
is a logistics company that people use to actually, you know,
transport stuff. It's called Straightforwarding, which is a great name
(22:56):
for like a male company. But what are they see
right now in terms of actual shipping volumes.
Speaker 4 (23:04):
So when we were talking to them, it would have
been probably second week of April, I think, and what
they were starting to see is that customers were indicating
concern of the tariff. So this is just to put
into perspective. The time I spoke to them, it was
one day before the exemptions were announced, and therefore two
(23:28):
days before the exemptions were kind of unannounced.
Speaker 2 (23:31):
I remember that weekend, yeah, yeah.
Speaker 4 (23:33):
Yeah, yeah, And then it was a day or two
after the most recent round of tariffs, and so that
at that time the highest general tariff. Of course, it's
different depending on the classification of the good. The highest
general I think they quoted at one hundred and seventy
percent depending on how you count the previous administration. So
what they were seeing was a lot of customer I mean,
(23:54):
he just confirmed panic was the word I used, and
he confirmed that word where they're customers were panicked about
the pricing and about the uncertainty of what's the tariff
going to be and if it goes away, can we
get a refund? As far as shipment volume. In the
time since talking to them, there's been a reduction of
(24:15):
volume into the port in LA in particular. I think
I actually saw a Bloomberg report about that, So you're
probably more informed than I am on the specifics of it,
but I think I read there was a year over
year reduction anticipated for next week of correct me if
I'm wrong with something like thirty five percent. Does that
sound right?
Speaker 2 (24:33):
It sounds yeah.
Speaker 4 (24:36):
Yeah, So I think that's the number I read this morning. Anyway,
what they're seeing is potential reduction and import which means
reduction need for people who do that job, and you know, couriers,
anyone in that whole chain warehousing. There's a ton of
warehousing in City of Industry in California, and they're going
to be impacted for.
Speaker 2 (24:58):
Sure, stepping back, even sitting aside the tariffs, what are
gamers looking for when they buy, Whether it's say a tower,
(25:21):
like you know, I know, there's some part of its design,
and then cooling I imagine sort of keeps it alive
and healthy. For high quality cooling keeps it alive. And
then there's purely you know, high performance gear for the
best gaming experience. Like what does your viewer, what do
they want and what are they benchmarking various options against
(25:41):
each other on what specs?
Speaker 1 (25:43):
Sure?
Speaker 4 (25:44):
Yeah, so our viewers tend to build their own computers,
so you call it DIY right through it yourself PC
building and for anyone who hasn't done it, it's really fun.
It's pretty easy. It's like putting together legos, except with
way fewer pieces. But typically a shop first, based you
say your budget, you have an idea of what you
might want to spend. The first two components people are
(26:06):
pricing out are normally the CPU and the GPU. Those
drive the performance of the computer. So a lot of
people in our audience will work on the same computer
they game on. So those users might be using something
like Adobe Audition, which I just learned you all use
for this podcast or Adobe premiere or a photoshop and
so like just these three Adobe solutions alone depend which
(26:29):
one it is, they could be very CPU or very
GPU intensive, and the same is true for gaming, so
people tend to speck out the GPU and the CPU first,
something like cooling. I guess to name the components. There's
cooling for the CPU, there's a case, power supply, motherboard, RAM,
and typically a solid state storage device or an SSD.
And so these are the core components. The ones that
(26:51):
are more commodities would include the case potentially the cooling
or what people are starting to go for if they
have a little more budget is some kind of looks focus.
So I mean, you can make computers look really cool
these days, and yeah, and so there's a lot of
that too, where it's it's all I mean, it's really
not that different in concept from car customization, where there's
(27:15):
people who want performance and there's people who want fashion, right,
and then there's people who want both, and there's the
ones who spend the most money on it. But yeah,
generally speaking, what they're looking for is a high frame
rate to make the gaming experience feel fluid. They want
to be able to render the graphics at the highest
quality settings with the most polygons and geometry and the graphics.
And if they do work on the side, then they're
(27:37):
trying to balance the parts within the system, meaning they
want to evenly distribute the money in a way that
optimizes for what each application wants so that they can
run those outside applications that might be core intensive versus
say memory intensive or something.
Speaker 3 (27:56):
Joe, do you remember that old show Pimped My Ride, Yeah,
where they did make yeah, we need to like pimp
my computer kind of thing where the Yeah, I would
I would actually watch.
Speaker 4 (28:08):
Yeah, I could watch. There was. There is a another
YouTuber in the space, Jay's two Cents, who basically did
that for Terry Crews. Actually hasn't the actor? Yeah, yeah,
it built them a game in PC.
Speaker 3 (28:23):
Very cool. Talk to us a little bit more about pricing,
because it sounds like everyone agrees that the tariffs are
going to be the cost is going to be borne
by the American consumer, and so prices are going to
have to come up. But also when we're talking about
tariffs that are almost you know, two hundred percent in
some cases, it feels like that is such a significant
(28:47):
increase that You're also going to see volumes fall and
demand destruction, which normally would pull prices down, but I
guess everything is just so different this time. It's it's
kind of hard to gauge what's actually going to happen
to prices and how companies are actually dealing with that.
Speaker 4 (29:05):
Yeah, I think it could pull prices down eventually in
the short term, though, I mean, if their options are
losing hundreds of dollars per device or letting it sit
on a shelf, I think right now there's not enough
pain to well for most of them anyway to take
that hit just to liquidate whatever they can. So pricing,
(29:26):
I think it's pretty safe to say it's going to
go up. They've told us as much, most of these companies,
and yeah, I think what we're going to see happen
is an initially increasing price for the companies that are
still bringing products to the US, because not all of
them are, and as the tariffs change, I mean, if
they come down. This is a personal opinion, but I
(29:47):
don't think the prices are going to come down in
step with a tariff's production, at least not without some
kind of really severe market force, such as people just
stop buying stuff because I just don't see a reason
the companies would do that. They're going to have inventory
where they already paid import costs. Maybe they can get
a government refund, maybe they can't. They are worried about
(30:10):
the decrease and the value of their money, and they
may also just feel like they need to shore up
more profit, you know, to be a little safer. So
I really don't see pricing coming down anytime soon unless
there's just there's zero demand left and they get desperate.
But in terms of increases, so it's not linear. So
this is pretty interesting where one of the things I
(30:30):
learned talking to the companies was about the retail side.
I knew nothing about how this worked before. And retailers,
so one of the biggest ones in the US is Microcenter,
and they are like a highly specialized best buy. I mean,
if you do DIYPC building, they're your number one physical choice.
The etailers would be like New Egg or Amazon. And
(30:52):
what we learned is that some of these retailers, like Microcenter,
have very rigid margin demand, and so for computer cases,
for some of the companies we spoke to, the margin
demand is about twenty five percent and that means these
case manufacturers are often making less than just in terms
(31:13):
of percentage or even dollar amount, especially if they want
to get microcenter shelf space. Correct. Yeah, okay, yeah, so
that secures the shelf space. And I think under typical conditions.
I've had companies bad mouth retailers to me privately before
and ask us to keep it off record or not
share it at all. I've never had them on camera
(31:34):
just straight up say you know, the retailers are making
more money than us, and then express their discontent at
retailers being unwilling to budge on their own margin requirements. Interestingly,
what they told us was that Amazon was a little
more willing to have some flexibility, which maybe they're just
big enough, right, they have enough categories where they can
(31:55):
it might be an opportunity for Amazon to try and
soak some of that supply from these smaller retailers. But
the question is if a three hundred and sixty dollars
computer case that has all these bells and whistles now
has to be sold for six hundred to seven hundred dollars,
which is what the companies were telling us as an example,
(32:18):
will a consumer actually pay for that? And when they
don't what happens at retail, is it? You know, I've
seen plenty of headlines about empty shelves. I really don't
think that's just hyperbole. I think there's real chance of that,
especially in niche industries like this one.
Speaker 2 (32:35):
Yeah, so get you know, Let's say, you know, my
son isn't old enough yet, thankfully to be a hardcore gamer,
but it's probably a matter of years because I see
how much he like screens of all sorts.
Speaker 3 (32:47):
I wonder where he gets that from.
Speaker 4 (32:48):
Yeah, right, right, it's my It is my fault.
Speaker 2 (32:50):
But let's say, you know, I you know, it's later
in the year and I'm like, okay, I want to
buy him a Christmas present for the gamer in your
family or in anyone's family. What do you think this
Christmas looks like in terms of higher prices and diminished
variety of options?
Speaker 4 (33:05):
Yeah, the reduced variety is a big one, because if
you're consolidating your order volume, you're reducing your order volume,
you might have to consolidate the skews, right, so suddenly
the fifteen hundred units of red become fifteen hundred more
units of black computer cases, and so that definitely would
(33:27):
reduce I think the choice, or at least the variety,
like you're saying pricing. I mean, if someone really as reviewers,
our recommendation right now to the consumer very focused on
sort of consumer first, And to me it's like, I
wouldn't buy unless I know I really want the upgrade
(33:47):
or need it, maybe for work or just the computers
on its last legs. And if I were going to buy,
it would probably be now. But I think the greater
thing to consider there, at least in our recommendations, is
trying to remind people of hey, you know, if you're
not so sure about your job prospects, then it and
you really don't need it, then maybe hold onto the money,
(34:08):
which none of the companies want to hear us say,
but you know that's I think that's probably the responsible
thing to say. For Christmas or holidays. Yeah, I I
would imagine there'll be some pain, I think the lower end.
So here's where it gets interesting. The lower end components
would typically be where people would be directed in a
time like that, if prices are coming up, you go
(34:28):
for lower end. A percent increase on a cheaper product
doesn't feel as bad as a percent increase on an
expensive product just by the math of it. The problem
is right now, there's not a lot of cheap products
silicon in the gaming or the consumer space, So if
you want.
Speaker 2 (34:47):
Why allocate silicon capacity when you could be selling to
AI data centers anyway? Sorry, keep going.
Speaker 4 (34:51):
Exactly No, I mean that's exactly right. Yeah, it's and
like Intel, for example, with its GPUs, they have a
small GPU effort and consumer they've been pushing. One of
the people at Intel stated to me in the past,
we should be wrapping these and dollar bills when we
shift them out the door, because they're fighting so much
on the pricing with n video and am D that
(35:15):
it feels like they're losing money, and they might well be. Unfortunately,
they are not well established yet and they're the only
ones who offer a cheap ish video card for gaming,
And so you're left with this price creep where all
the video cards have pretty much moved up towards these
higher price classes. They've cut down what you get for
the dollar, which's lower memory capacity. Part of that is
(35:39):
product segmentation where companies like ndvideo recognize, like you said,
if I have a user who wants thirty two gigabytes
of memory, on the video card, they probably want to
use it to make money, and so if I'm on video,
I should make money because they're going to make money, right,
So you segment that, and then the consumer is left
with things that are less viable. They have less longevity,
(36:02):
so they won't age as well with the gaming graphics improvements,
and causes kind of a circle of buying hardware sooner
because it's gotten too unobtainable to go up to the
high end where you might have that longer, that better longevity.
Speaker 3 (36:18):
So I just have one last question. Obviously, the stated
goal of the tariffs is to move manufacturing production to
the States. Did any of the companies that you actually
spoke to talk about this as a possibility, and what
are the sticking points other than the time frame of
building a new factory, what are the sticking points or
(36:40):
the challenges in actually making more stuff in the US.
Speaker 4 (36:44):
Almost all of them indicated that this is not a
possibility anytime in the near future. There's one exception, which
is a company we spoke to called Proto Case, and
proto Case is part of a another company that makes
enterprise and server equipment called forty five drives, And so
these companies. They are headquartered in Canada, and for the
(37:08):
last twelve years, the owner was telling us or the
co founder, I should say, they were looking at it
opening a plant somewhere in the US for assembly and
for some light manufacturing, and so they've done that. They're
the only ones who've kind of gone that direction, but
they were already going that direction. And their whole business
model is speed, So if you need something, they can
turn it around a couple days, whereas if you need
(37:30):
a lot of something, you might be waiting months. Everyone
else basically said that it's it is not feasible to
bring manufacturing into the US for the products that they sell,
and a lot of that comes from supply chain. So
the best way for me to contextualize it as a motherboard.
A motherboard is roughly a one foot by one foot
(37:53):
board that goes right in the middle of your computer.
The CPU sockets into it, the GPU sockets into it,
the RAM goes in it. You can think of it
kind of like the brains down of the computer, and
a high end motherboard for a workstation or whatever. High
end gaming PC has somewhere between eighteen hundred and three
thousand individual components on it, so these are they get
really small? Yeah, And so these components come from all
(38:17):
over the place. So a motherboard factory is a service
mount technology line, it's called an SMT line to mostly
automatically pick and place components onto the board, and it's
pulling those from normally reels like drums, almost like a
film reel of components. And those reels of components come
from other companies, which come from other companies, And so
(38:39):
you have a factory supply chain to make one part
of one computer that might go, depending on how you
want to count it, one hundred factories deep, or if
you look at just sort of the big components after
they've come from raw materials and things like this, you're
still at maybe ten to thirty factories. And that's just
to make one part of one computer. Incredible, and so
(39:01):
the challenge that all the companies enumerated to us was,
you can bring the SMT line to the US and
you can stamp these components down on it. You're gonna
buy those components from somewhere else, and it's gonna be Vietnam, Thailand, China,
mostly China, Taiwan and so forth. But if there's tariffs
on those parts which are about us. You know, they're
(39:24):
not literal raw materials, but they're pretty close in the
computer world, then you still face all the same challenges
as before. So those would also have to come over
to America. And then now you're bringing in capacitor supply
or metal supply or rare earth metals, and pretty much
no matter where you look, you're bringing something in from someone.
(39:45):
And and so I think it's just the challenge of
what was stated to us was there needs to be
a plan with kind of hard timelines of here's our
target to move this industry's manufacturing by this date, and
just flipping a switch it just seems to cost too
much chaos there. You know, people would be timid to
(40:05):
invest in a factory in the US that might take
several years to build if they're not sure what's going
to change tomorrow.
Speaker 2 (40:14):
I just have one last question too, And I sort
of have this nagging feeling that I might be stepping
into a gamer landmine.
Speaker 4 (40:22):
But I literally don't know at all.
Speaker 2 (40:25):
Why not just you know, all this stuff. It feels
the idea of having to worry so much about the
specs on your own computer sort of feels retro I
just do every all my work in a browser. Why not,
just like the whole industry, go to cloud gaming and
not have to worry about the spinning disk in your home?
Speaker 4 (40:41):
Oh you're hurting me?
Speaker 2 (40:42):
Yeah, in one minute or less. No, let's tell like,
could there be a shift to cloud gaming? I don't
know say about that? What are the constraints? Why not
on Netflix for gaming or whatever?
Speaker 4 (40:52):
Sure? The shortest possible answer I have is latency and
control or customization so as quickly as possible. I mean
latency is the responsiveness between your input and what happens
on the screen, and going through networking infrastructure, you might
be at two times longer three times longer latency, meaning
(41:14):
that when you push the button on the controller or
the keyboard, you don't see that action until a perceptibly
long difference versus if you played it locally. The other
issue is the concern on the consumer side of you
own nothing, right, and the more you own nothing I
think kind of the more uncomfortable, certainly, and I think
(41:37):
most of our audience gets with the product in general.
And then the last concern is just that customization, where
it may be a somewhat equivalent would be why if
you can rent a car for about the same price
as buying a car, why would you buy a car.
There's a lot of reasons. One is external forces. You
have no control over that car. What if they want
(41:57):
it back, what do you do right? You like car,
they take it back. Or in the gaming world, if
they just decide this game is not going to be
available anymore, kill the license. It's gone, and you're talking
about something that people have a very deep emotional connection with.
It can just be snapped out of existence. So plus
the customization, I mean, it's really fun to build a computer.
(42:18):
So that's my quick version.
Speaker 2 (42:19):
Our producer Dash says, I asked a new question there,
Steve Burger gamers next is it's a really phenomenal work
that you put together. I really would encourage all the
listeners to go check it out. And thank you so
much for coming on off off.
Speaker 4 (42:32):
Thank you it was fun. Tracy.
Speaker 2 (42:46):
I think it was one point in my life, maybe,
like I don't know, twenty ten, i'd gotten my idea
I should build a computer.
Speaker 4 (42:53):
I never did it, but.
Speaker 3 (42:54):
You were going to say you should get into gaming.
Speaker 4 (42:57):
No, I should not get into gaming.
Speaker 5 (42:58):
I thought it might be fun, and there's like, I
don't know, but it does seem it does seem cool
to build your own computer. I imagine, yes, the thing
is all I do is tweet an email, and I
really cannot.
Speaker 3 (43:09):
Justify, Like you want to get your hands dirty.
Speaker 4 (43:12):
No, I do.
Speaker 2 (43:12):
Kind of it seems cool, but I can't really justify
it because I don't do anything this particularly computing intensive.
Speaker 3 (43:17):
All right, well, let me know if you decide to,
you could do like a pie or something like that.
There's so many interesting things to actually pull out of
that episode, But I guess the big one for me
is the question of where does the pain of tariffs
actually land. And I know everyone's expecting higher prices at
(43:38):
this point for consumers, but there are still all these
additional layers where you could see companies or other entities
kind of absorb the costs. And so it was really
interesting when Steve was talking about microcenter and margin demand
of twenty five percent and the frustration of people that
actually make things that the retailers aren't necessarily budgeting on
(44:00):
the margins that they want to see at their stores.
That's really interesting, And I guess the question is if
things get really bad, do the retailers start to move
on that.
Speaker 2 (44:10):
There's so many interesting micro and macroeconomic stories that you
could take out of this one industry, including who bears
the pain, who eats the margin? The question you asked
about the difference between large and small companies and the
risks that they can take. Obviously, you know, the web
of supply chain just extraordinary complex, and the uncertainty and
(44:33):
how even one piece of moving manufacturing back would require
like multiple different kinds of factories. I just thought that
was like incredibly interesting. It's also sort of interesting this industry.
I think part of the reason I was curious. You know,
one of the stories in politics, of course, is the
incredible success or the surprising success that Trump had with
(44:53):
sort of young men in particular. And so when I
think about an industry in which my guess is that
many of the people in this space have drifted more
towards that side of the aisle over the last several years.
And then now, you know, I don't know for sure
how the gamer audience voted, but I suspect that there's
a pretty solid Trump contingent in there. And so this
(45:13):
is just going to be, you know, it's gonna be
interesting to see the reaction.
Speaker 3 (45:16):
I imagine there's going to be a lot of coverage of
this issue in the gaming community, so we'll have to
watch out for it. Maybe have Steve back on the show.
Speaker 4 (45:23):
Yeah. Absolutely.
Speaker 3 (45:24):
Shall we leave it there for now?
Speaker 4 (45:25):
Let's leave it there.
Speaker 3 (45:26):
This has been another episode of the aud Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (45:31):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow Steve Burk's coverage at gamers Nexus. Follow our producers
Carmen Rodriguez at Carman armand dash El Bennett at Dashbot
and Kilbrooks at Kilbrooks. For more Odd Lots content, go
to Bloomberg dot com slash odd Lots. We have a
daily newsletter and all of our episodes, and you can
shut about all of these topics twenty four to seven
(45:53):
in our discord where we even have a gaming subchannel
that's discord dot gg.
Speaker 4 (45:57):
Slash out Lots.
Speaker 3 (45:58):
And if you enjoy Odd Lots, if you like it
when we talk about computer games and the supply chain
of PCs, then please leave us a positive review on
your favorite podcast platform. And remember, if you are a
Bloomberg subscriber, you can listen to all of our episodes
absolutely ad free. All you need to do is find
the Bloomberg channel on Apple Podcasts and follow the instructions there.
(46:19):
Thanks for listening.
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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