Gearbest Tech
[Gearbest]”I don't know which direction the wind is blowing – I am in a dream, and my heart is broken in the sorrow of the dream!” When hundreds of thousands of people in Silicon Valley encountered a cold wave of layoffs, they were forced to leave the office. Survive and pass on the cold to everyone, this has become a necessary strategy for corporate survival today.
Throughout 2022, from mobile phones to PCs, from the Internet to cars, everything is filled with coldness. Where is the spring of the industry?
According to statistics from the China Association of Automobile Manufacturers, from January to October 2022, domestic car sales were 21.975 million units, a year-on-year increase of only 4.6%, showing signs of weakness. Some organizations predict that domestic sales of new energy vehicles will exceed 6.5 million units this year, and BYD and others will be among the few winners. However, new energy vehicles have never been able to save the huge automobile market single-handedly. This is because its penetration rate is not high enough, and a 30% ratio cannot influence the battle situation. The automobile industry is not the only track for new energy vehicles, but it has the same bone-chilling coldness. In the once-hot autonomous driving track, capital has been exhausted, and the giants hiding behind have lost their confidence and patience. Someone in the autonomous driving industry joked: “When capital abandons you, it won’t even say hello.”
In traditional industries such as smartphones, PCs, and smart TVs, a large number of manufacturers are still struggling to support sales. In the meantime, they found hope and solace in the financial reports of several quarters, even if this was just a short spring in the digital sense. For many industries, the epidemic or the occasional stimulus is nothing more than a virtual spring, making us mistakenly think that the heavy air has been reopened. Therefore, we must look for new opportunities to survive this cold winter.
The gaming industry is as hot as it is cold. Due to the restrictions on version number issuance, domestic games have encountered a cold winter. Data shows that the actual sales revenue of the domestic game market in the third quarter of this year was 59.703 billion yuan, a double-digit decrease both year-on-year and month-on-month. Even major game companies like Tencent have also suffered. However, the previous words can be completely reversed. As cold as the game industry is, it will be as hot as this industry never lacks popularity. Moreover, the domestic game version number was released again not long ago, releasing positive information.
personal computer
In any case, what we are struggling with is not how cold the winter of the industry is, but how to discuss the spring of various industries. Gearbestwill conduct an in-depth discussion on the topic of “Will consumption of downgraded graphics cards soar and the popularity of the PC industry only be temporary?”
Just this year, the PC industry has been extremely prosperous. Due to some reasons, the public's demand for online office and online learning has increased sharply, which has greatly promoted the expansion of the PC market. But there are peaks and troughs, and there are warm springs and cold winters. When many people didn't notice, the winter of the PC industry has quietly arrived.
The consumption downgrade market is “continuously falling”
Looking back on this year, we will find one thing: everyone's “wallets” seem to be less bulging than in previous years. We can see this from this year's Double Eleven. The two major e-commerce platforms Taobao and JD.com no longer publish their total transaction data. This is very rare and may also mean that they no longer achieve the excellent results they did in previous years. In the field of consumer electronics, according to data from third-party organizations, mobile phone sales during this year’s Double Eleven dropped by about one-third, which can be described as disastrous. Of course, if the mobile phone market has fallen so badly, the PC industry will naturally not recover either.
Although it is also a consumer electronic product, compared with mobile phones, PCs have richer functions. Not only can they meet personal daily entertainment needs, but they are also one of the most important productivity tools in current society. In a sense, PCs are more important to society than mobile phones, and society's demand for PCs is also greater. However, under the influence of various factors, today's PC industry may be experiencing the largest regression in the past thirty years.
According to data from market research firm Gartner, in the third quarter of 2022, total global personal computer shipments are expected to be around 68 million units, a full 19.5% decrease from the third quarter of 2021. Not only have the top five manufacturers in terms of market share experienced regressions of varying magnitudes, but Gartner also stated that this decline is the largest decline in the PC industry since the mid-1990s. In addition, according to information obtained by Gearbest, this is the fourth consecutive quarter of year-on-year decline in the PC industry. Gartner also warned that demand for PCs in both the consumer and enterprise markets has been weak, and economic uncertainty has also led to more selective IT spending.
PC market situation in the third quarter of 2022
Gartner's statistics only include desktop computers from brand manufacturers, and do not include the personal installation market. Moreover, the current “cold winter” situation in the PC market is not only caused by consumption downgrades, but also graphics cards cannot escape the big pot.
The surge in graphics cards and the mining tide have receded, leaving behind lingering effects
In the past two years, under the influence of the “mining boom”, the graphics card market can be described as “a chicken feather in one place”. Although virtual currency has not been around for a short time, and there have been several waves of “mining” before, the wave of “mining” starting in 2020 is more violent than before, and its scope of influence is also more far-reaching.
Starting from 2020, the “mining boom” has begun. At that time, not only had the price of graphics cards skyrocketed, making it almost impossible to buy them at the official original price, but other products such as mechanical hard drives had also become tools for mining. All this not only angered the installed users at that time, but also dealt a heavy blow to the personal computer market. However, for those upstream manufacturers, the problem is not big, because instead of selling their own graphics cards to individual users, it is better to package them in large quantities and sell them to “mining farm owners” for “mining”. The same is true for making “dollars”, but it is even better to sell them for mining.
According to Nvidia's financial report, in the fourth quarter of 2021, they achieved a single-quarter revenue of more than 5 billion U.S. dollars for the first time, and the total revenue for the year exceeded 16.6 billion U.S. dollars, setting a record, and profits also reached 4.332 billion U.S. dollars. Both data increased by more than 50% compared to 2020. However, Nvidia, which was lying around counting money at that time, may not have expected that the negative impact and backlash brought by this “mining boom” far exceeded its expectations.
In 2022, when the “mining tide” recedes, the graphics card market, which has been overdrawn for two consecutive years, will fall directly from the peak to the bottom. The “miners” who had previously purchased a large number of graphics cards began to sell graphics cards crazily in an attempt to earn the last wave of profits. A huge amount of second-hand mining cards flowed into the market. Previously, the inflow of mining cards in 2017 directly affected the graphics card market in the following two years. Today, the scale of mining cards is far beyond what it was in 2017. Moreover, although there are problems with these mining cards nowadays, they are not necessarily fatal. Many merchants selling mining cards have also launched corresponding warranty services, and some stores have a warranty period of up to two years. Therefore, in the graphics card market back then, second-hand mining cards were indeed a good choice. We could even buy a 3070 graphics card for less than 2,000 yuan.
Cheap second-hand mining cards
So with mining cards flooding the market, what strategies have graphics card manufacturers adopted? Let’s not talk about AMD for a moment. Nvidia’s strategy is obvious, which is to increase prices. Currently, Nvidia has only a small number of 40 series graphics cards on the market. Among them, the RTX 4090 is priced at 12,999 yuan, while the RTX 4080 12GB is priced at 7,199 yuan, and the RTX 4080 16GB is priced at 9,499 yuan. We can see that compared with the initially released 30 series graphics cards, the price of the 40 series graphics cards has increased significantly. On the one hand, the increase in the price of 40 series graphics cards cannot attract enough installed users. On the other hand, the cost of producing computers by brand manufacturers has also been affected by this.
Of course, for Nvidia, there are good reasons for the increase in graphics card prices. It is very clear that the PC market has been overdrawn by the two-year “mining boom”. So before the second-hand mining cards on the market are completely consumed, instead of competing with the mining cards in a thankless manner on the cost-effectiveness card, it is better to increase the selling price to harvest the existing leeks.
Nvidia financial report data
So, what's the cost? In Nvidia's third quarter fiscal 2023 (third quarter 2022) financial report, their single-quarter revenue fell by 16.5%, but their profits plummeted by more than 70%. And, it is almost foreseeable that such declines will continue in the fourth quarter. We may say that NVIDIA has already made all the money in the next few years in the previous “mining wave”, but looking at it now, it is not actually a winner.
How can the PC industry get out of trouble?
For the PC industry, the current situation is not optimistic, and the difficulties they face are multifaceted. However, although winter has arrived, it is only temporary after all. All difficulties will eventually pass, and the arrival of spring is only a matter of time.
First of all, the consumption downturn in the general environment is only temporary. For society, enterprise users and individual consumers, PC will always be a rigid demand. It is a necessary tool for social progress and productivity development. Although the current PC industry is experiencing its largest decline in decades, once the global economy begins to recover, the market demand it can unleash will be even greater. What the PC industry needs to do is to continue investing in research and development in related fields to enhance the appeal of PC products to consumers.
gaming graphics card
On the other hand, the digestion of mining cards is only a matter of time, and many consumers are not able to accept the use of second-hand mining cards, so the demand for this part is still suppressed. With the development of the gaming field, players' demand for high-performance graphics cards is also increasing day by day. Previously, the release of “Cyberpunk 2077” caused many players to upgrade their computers. In the future, as manufacturers such as Microsoft and Sony continue to develop games, especially Sony, which is continuing to bring games originally on the PS platform to the PC platform, players' requirements for computer performance will only become higher and higher.
write at the end
All in all, PCs play a very important role in the current society. Even if there is a temporary winter, we do not need to be pessimistic. The public's demand for PCs has always been there, and this market still has a promising future.
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