Tariffs and The End Of Affordable Computing w/ Steve Burke

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Speaker 22 Coming up, will Steve Burke of Gamers Nexus be able to help Ed Zitron understand tariffs? Should we treat Sam Altman's new startup like a venereal disease?

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Speaker 23 That's right, you're listening to Better Offline. I'm your host, Ed Zitron.
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Speaker 23 More importantly, today I'm joined by Steve Burke, the host of the incredible Gamers Nexus, someone I've wanted on the show since I started it.

Speaker 23 Steve recently put out a three-hour-long video called The Death of Affordable Computing, and it's the single best way I've seen anybody explain the current tariff situation.

Speaker 23 Steve, thank you for joining me.

Speaker 24 Oh, thanks for having me. Yeah, I'm excited to talk more about it.

Speaker 23 So, is there any way you can break down in simple language how these tariffs actually work?

Speaker 24 I mean, effectively, the tariffs are

Speaker 24 effectively a tax, right, that's paid on imports. So the goods come in from any other country that's potentially tariffed, and the company bringing those goods in has to pay some amount

Speaker 24 in order to complete bringing them in. And so that then gets passed on to somebody.
Maybe they absorb some of the costs. Maybe they increase the price of the product.

Speaker 24 But tariffs in general, of course, not a new concept. And

Speaker 24 it's just this particular round of them has affected the computer hardware industry in a larger way.

Speaker 23 So they're paid by the people receiving the goods. So the computer, so like height or cyberpower, whomever receiving a case, for example, would pay the tariff before they even shipped it to someone.

Speaker 24 Correct. Yeah.
I mean, it's the same all the way down to the smallest companies. We spoke to Louis Rossman as part of that piece.
He's known best for probably right to repair. And

Speaker 24 he's a good example where, as a small repair shop in Austin, Texas, he's got maybe six or so employees.

Speaker 24 He personally doesn't, as he said in the video, bring in the goods, but he buys them from someone who does. So,

Speaker 24 you know, then that person would be the one importing them and paying the tariff.

Speaker 23 So, what made you want to make this video? Because you've done a good amount of PC industry stuff, but tariffs feels like a jump from you. Not an illogical one, though.

Speaker 24 Yeah, tariffs was a big topic, and it was

Speaker 24 very challenging to try and approach because for us,

Speaker 24 the number one reason to get into it was just we're starting to see the impact on computer hardware, and a lot of companies had things to say about it.

Speaker 24 So, that was the obvious reason to maybe look into it.

Speaker 24 The hesitations from us initially were

Speaker 24 this is a topic that it's very difficult to completely isolate from politics, which we try to stay away from.

Speaker 24 But it's also important, and it does affect what we talk about every day, which is value and pricing.

Speaker 24 But the other challenge is that this is not something where I can claim to be an expert, like global trade, you might imagine.

Speaker 13 Yeah, this is a big

Speaker 24 large topic. But that made it interesting to us because it was one of those like, okay, so we're

Speaker 24 closer to where you might expect most viewers to be in terms of knowledge, where you're just getting the information daily, with the one exception that we might have better access to companies that do have a lot of experience with this stuff.

Speaker 24 And maybe no one person can break down global trade for us.

Speaker 24 And we've all seen economists on TV and whatever.

Speaker 24 But what we could get is people talking about just how does it affect them and their company.

Speaker 24 And then hopefully with that, put together a fuller picture that's, you know, a little more, maybe like a pragmatic approach to it. So that was, yeah, that was the way to break it down for us.

Speaker 23 So for the listeners who haven't watched the video, and I say this as someone who can barely make it through a half an hour video, I watch the whole bloody thing.

Speaker 23 What are the current effects? What are the things happening today to, say, PC manufacturers that people might not know about?

Speaker 24 It's interesting. So might not know about makes that interesting.

Speaker 24 The ones that people do know about, I'll keep brief here, but just days ago, Microsoft moved to increase pricing of its Xboxes.

Speaker 24 Logitech has increased prices of its peripheral components, keyboards and mice, and so forth. And this is something we're going to see.
Of course, here, I was just speaking to them.

Speaker 24 They're about to increase the price of some of their computer cases that we're in the process of reviewing. And that's kind of the obvious one.
That's the one people expect.

Speaker 24 There's also,

Speaker 24 and having listened to some of your previous episodes, I think this might be a topic you'd want to get into.

Speaker 24 But there's also some room for greed, corporate greed, where this is a great cover story for them to change some prices.

Speaker 24 But then, as far as answering the question of like, what effects might people not know about?

Speaker 24 I think there's some really interesting ones sort of down chain in the supply chain where

Speaker 24 things like logistics and freight and shipping companies are starting to have to deal with potentially reduced hours.

Speaker 24 And so you think about the supply chain, like to get a product from a country to another country,

Speaker 24 just to make it in, say, China, a motherboard might require something like 100 factories if you tally all of them, meaning,

Speaker 24 yeah, including the metals factories. And

Speaker 24 so you've got all those impacts. And then you have the freight and the couriers.
the port, the dock workers, the couriers on the other side, the warehouse workers, right? It's just a huge chain.

Speaker 24 And it's really, it can't be elastic. It's got to be pretty rigid.

Speaker 24 One of the interesting ones we're seeing, though, is some of the factories

Speaker 24 from some of the companies I was just speaking with are beginning to adjust their terms.

Speaker 24 So, factories will allow terms of payment to be potentially partially upfront and partially on completion of order.

Speaker 24 Some of them are starting to adjust to front-load more of the upfront cost or all of it.

Speaker 24 And that's because they have kind of gotten scared of potential order abandonment when companies can't afford the tariff. They abandon the container and stiff the factory.
Yeah.

Speaker 24 And so that'll have this unseen impact later where it's going to affect the cost of money. Companies have to borrow money a lot of times to bring this stuff in.
They have to pay more up front.

Speaker 23 Oh, so they'll have to be borrowing more money up front because otherwise

Speaker 23 they won't be able to afford the orders that are now more expensive on the front end.

Speaker 24 Yeah, and then they pay interest for a longer period of time. That gets factored in.

Speaker 24 And so it's just really like the more you talk to people, the more there's all these hidden consequences that pop up.

Speaker 24 And the one thing everyone kind of drove home was it's not to them the tariffs themselves that are necessarily the problem. It's sort of the way they were being rolled out where it was

Speaker 24 at least for a couple of weeks, their nearly daily changes and unpredictable.

Speaker 23 I did like during the video watching as you went from person to person saying, okay, right now, this tariff is this. By the end of this conversation, it may not be.

Speaker 24 Yeah,

Speaker 23 insane way to run global trade.

Speaker 23 You had a few examples as well where it kind of looked like certain things would just double in cost for the company, that they would just be paying effectively nearly double, or like if it's 120 bucks to buy something, they're paying 100 bucks on top.

Speaker 23 How is any of this sustainable?

Speaker 24 I think,

Speaker 24 I mean,

Speaker 24 for the computer industry,

Speaker 24 I'm not sure that it is sustainable.

Speaker 24 There's already been price creep that is not anything to do with tariffs.

Speaker 24 Just over the last several years, the companies, yeah, I mean,

Speaker 24 they have big markets to sell into. And so if you're a small-time consumer or gamer, or you use Adobe Premiere with the CUDA GPU, you're just not at the top of the priorities.

Speaker 24 And the only way to get closer to the top is to pay a whole hell of a lot lot more for the components. So, like, there's already been a price creep.

Speaker 23 When you say pay a lot more for the components, who is paying more there?

Speaker 24 It's the consumer. I mean,

Speaker 24 yeah.

Speaker 23 So, it's really the high-end stuff is the best.

Speaker 23 Why do you have to buy the more expensive stuff? Is it just that it will be the cheaper ones are having to use lower-quality components, or is it something else?

Speaker 24 Well, it's interesting because it's almost like

Speaker 24 this question, I think, is

Speaker 24 the real answer is that cheap stuff doesn't exist anymore.

Speaker 24 Like the cheap products are gone. And this is pre-tariffs.
This is like, it's only getting worse. But you look at GPUs and

Speaker 24 NVIDIA with its dominance has managed to

Speaker 24 slowly shift the low end into the mid-range in terms of pricing and the mid-range into the high end in terms of pricing, but not in terms of necessarily performance scaling.

Speaker 24 And so you're already paying disproportionately more for what you're getting versus several years ago. And this is beyond inflation.
This is beyond tariffs.

Speaker 24 You stack something like massive tariffs on top of it. And

Speaker 24 people who are already kind of struggling to justify a purchase of an expensive GPU. I was looking at RTX 5090s, which are supposed to be about a $2,000 video card about a week or two ago.

Speaker 24 I haven't checked today, but and and the cards were typically in the $2,900 to $3,000 range. Jesus.
Yeah, and that includes on-shelves at micro centers.

Speaker 24 And some of that's going to be tariff impact, and some of it is just kind of price creep.

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Speaker 23 It does kind of feel like,

Speaker 23 well,

Speaker 23 to the title of the video, it's like the end of affordable computing has already kind of happened because it doesn't seem for, and for our less technical listeners, when we say 5070, 5080, 5090, referring to NVIDIA graphics cards on the consumer side.

Speaker 23 So the things you put on a computer so you can see what's on your monitor and also play games. Steve, I'm sure you'll love that technical explanation.
Yeah, that's great.

Speaker 23 But it's, I nearly said 3DFX there for a second, aging myself.

Speaker 23 But it feels like those lower end ones aren't even anywhere near as good as, you did a video on this as well, that the 5070 5080 the lower end or mid-range ones just are nowhere near as good as mid-range and lower end used to be yeah it's the

Speaker 24 i think the the most

Speaker 24 understandable version of this in terms of when we were trying to figure out how do we communicate what's happening to people uh was we came to the word shrinkflation which people are familiar with except instead of a bag of chips where you get well maybe you should explain what it means just

Speaker 24 yeah

Speaker 24 yeah so the concept being that and again to preface this you know we're experts on on hardware not economy but like this this is stuff that it all kind of bleeds together in a way we get familiar with it but shrinkflation being the the concept of you go to a store to buy your bag of chips or your bundle of toilet paper or whatever and you get fewer items for minimally the same cost as it used to be right so it sort of disguises uh the change in value the cost per unit or whatever that you're getting.

Speaker 24 Then you apply this to electronics, and the version of it is

Speaker 24 you

Speaker 24 buy the video card or the CPU, and maybe you have fewer,

Speaker 24 lower performance, relatively speaking, than you would have had in previous generations, while still spending at least the same, but likely more.

Speaker 24 And one of the things that,

Speaker 24 you know, this kind of deviates from the tariffs discussion, but one of the things I'm concerned about is as cost for consumer electronics goes up,

Speaker 24 especially things like computers,

Speaker 24 and especially as caused by things like the current tariffs, there's an opening for companies like NVIDIA

Speaker 24 to

Speaker 24 push for more of a lack of ownership model. So like they have services where you can play games over the internet, streaming, kind of like Netflix.

Speaker 23 Was it GeForce now?

Speaker 24 That's right. Yeah.

Speaker 24 And this creates a great opening for these companies to step in and say, you know, we're so sorry you can't afford our cheapest model

Speaker 24 $550 video card to play games or to render videos, you know, or do 3D modeling.

Speaker 24 But good news, we have something for you, and it's $50 a month, and you can use it for, you know, this many hours and in between, maybe we'll do ads or maybe we turn on and off the different services you have access to.

Speaker 24 And so that's one of my concerns is it's another step in furthering the you own nothing-ness of the current consumer economy.

Speaker 23 It kind of feels as well, and you hinted at it earlier as well, where it's like

Speaker 23 these companies are, Microsoft's raising the price of the Xbox. I don't imagine that's coming down.

Speaker 23 I don't get the sense that Microsoft is going to say, don't worry, everyone, that everyone on Wall Street, by the way,

Speaker 23 the markets love it when we charge less. So we're going to bring this down as an ethical company.
It just feels like

Speaker 23 that there are the immediate near-term effects where its prices are going to increase, but just

Speaker 23 no one is going to

Speaker 23 bring these prices back down at the end of the tariffs. No one really understands what's going on.
So it almost feels like they'll be able to

Speaker 23 kind of push it under the rug and obfuscate what they've actually done as well.

Speaker 24 Yeah, I think

Speaker 24 there's a couple of things going on where there's

Speaker 24 it's interesting. Normally we, as in GN, we're in a very cynical

Speaker 24 mindset for a lot of our coverage, and that's just the nature of it. It's

Speaker 24 not necessarily adversarial, but it's untrusting, I would say, of what companies are saying.

Speaker 24 And

Speaker 24 so part of that in this situation is... Okay, there are avenues here for companies

Speaker 24 to get the price increases they've wanted, but they've needed an opportunity to do it.

Speaker 24 But at the same time, unlike most of the other stories we cover, this one is so wide-reaching and industry impacting with the

Speaker 24 sort of sporadic nature of the tariffs application and also the high percentage of them that there are real consequences and it is hurting companies.

Speaker 24 So you've got this mix, right, where it's like, we can't be too cynical this time because there are real world impacts, like with height, where they were just going to lose money for computer cases that they sell if they continued to sell them into the U.S.

Speaker 24 market. And so they've abandoned it.
They decided we don't need to sell to the U.S., we'll send them somewhere else.

Speaker 23 Which is crazy.

Speaker 23 That's a large part of their business.

Speaker 24 Yeah, it was, I want to say the number

Speaker 24 the product director Rob Tyler shared during the interview, I think he said 65% revenue is from the U.S.

Speaker 24 Yeah. And,

Speaker 24 but at the same time, you know, know, so that's a real,

Speaker 24 that's where

Speaker 24 it's not helpful to be cynical because this is a real impact to this company. We've seen their numbers.

Speaker 24 But then on the flip side of that, back to the cynicism, you look at a company like Microsoft where they've increased not only the cost of their physical hardware, which is impacted by tariffs because a lot of it does come from China.

Speaker 24 but also they've increased the price of their digital downloads, like video games, where they're saying they're going to start moving towards an $80 per game model from typically $60.

Speaker 24 And digital video game downloads are not currently, as far as I understand it, are not tariffed. No.

Speaker 23 In fact, that's the whole point of digital downloads.

Speaker 23 Why are they $80? You're saving money selling this.

Speaker 24 Right.

Speaker 24 And I think what's happening here is

Speaker 24 they have one real reason to increase the price, which is their cost has gone up on the hardware. And

Speaker 24 that is

Speaker 24 giving them a sort of cover fire to also increase the price of things that haven't gone up.

Speaker 24 Maybe you could make an argument for inflation affecting development costs or something like this, but packaging it all together and doing it at the same time, I think it's also,

Speaker 24 it sort of exhausts the consumer's attention

Speaker 24 where

Speaker 24 it eases the acceptance of this higher price. Because at some point you get hit with this this news so frequently, you're like, I just, I don't care anymore.
I get it. It's all expensive.

Speaker 24 And you lose the capacity to be mad at a specific company.

Speaker 23 But it's just, I truly, I'm learning about this in real time. So Microsoft is raising the price of first-party games to $79.99.
That's completely insane.

Speaker 23 And I think that there is a delineation of cynicism here, where you can be cynical about a company, but all of the companies you talk to in this video were very much, I mean, you had competitors hanging out with each other to tell you stuff.

Speaker 23 It feels like there is a market difference between a company saying, yeah, we every two minutes, a wheel spins and we pay more on staff and having a real reason to do that, and a company just saying, yeah, games are 80 bucks now.

Speaker 23 I don't know what to tell you, mate.

Speaker 24 Yeah, and I think the companies we spoke to,

Speaker 24 I mean, they range, like I said, from someone with six employees who's a sort of true small business owner, like the, you think of an American small business owner, and that's exactly the representation you think of,

Speaker 24 all the way up to multi-billion dollar publicly traded Corsair components, which makes memory, keyboards, computers. They even have some assembly in the U.S.

Speaker 24 And

Speaker 24 all of them

Speaker 24 feel the impact in comparable ways, but where they differ is their ability to cope with it. And so I think it's these smaller companies that are going to get hit particularly hard.

Speaker 24 And this actually came up a couple of times in the interviews as well. One of them that

Speaker 24 we didn't include was a comment that

Speaker 24 someone from Corsair made. I think we weren't filming yet, but

Speaker 24 we were talking about GN. And my goal with this wasn't to

Speaker 24 insert ourselves into this story. So we kind of kept anything about Gamer's Nexus out of it.
But the tariffs impact us too.

Speaker 24 And one of the comments he made, I asked him, who Who do you think this affects the most?

Speaker 24 And he said, Well, it's guys like you, right? Like it's small businesses and medium-sized businesses because the big ones are large enough to have levers to pull.

Speaker 13 Right. And

Speaker 23 I guess I'm going to ask you one of the most annoying questions that I possibly could, which is, and you do cover this in the video. Why can't they just make in America?

Speaker 23 And I know that the answer is, it's going to be very obvious, but still, people are going to want to hear. Sure.

Speaker 24 Yeah, it's really, it is actually a great question. It's obviously very common.

Speaker 24 It's complicated. So

Speaker 24 the

Speaker 24 easiest answer to that, I think if you try to

Speaker 24 boil it down into kind of like two components, there's cost, which everyone's familiar with, and we can kind of get into that. So there's

Speaker 24 things like labor cost, real estate cost, all this. And there's maybe some greater social discussions to have there with regard to labor cost.
But then there's also supply chain.

Speaker 24 And so if we ignore the cost component for a moment and just assume it costs exactly the same amount of money to make it in China or Vietnam or Thailand as it does in the U.S.,

Speaker 24 which it doesn't.

Speaker 24 The global manufacturing average cost in terms of wage per hour is, according to Corsair's CEO in our interview, is $2 to $4 per hour.

Speaker 24 It's obviously not even close. Yeah.

Speaker 24 And

Speaker 24 so if we just assume it's equal, though, for sake of conversation, the new challenge is

Speaker 12 in

Speaker 24 China in particular, but just that part of Asia in general, there's already a huge factory presence. They have the tooling, they have the people, they have supply chain.

Speaker 24 And so what that really means is you can go to Hua Chan Bei and Shenzhen right now and you can go talk to someone to get tell them you have this brilliant idea for a new electronic device you can have someone design the PCB you can have someone print the PCB the printing can be delivered same day for a prototype and you can also start sourcing factories for the capacitors the inductors the semiconductors the MOSFETs

Speaker 24 the shell or case if there's going to be one all of that can happen in the same spot and it can all be sourced from sort of the same say, 50-mile radius for the most part.

Speaker 24 And that doesn't exist in the US.

Speaker 24 And if you want to make a motherboard, as an example, that came up in the video in the US, we didn't get too deep into it in the video, but there's probably 10 to 30 major component, complete component suppliers for that board.

Speaker 24 So if you want to make that motherboard in the US, which your CPU and your GPU go into, it's sort of the brainstem of the computer. You bring that over here.

Speaker 24 And what you might have first is the assembly line. It's an automated line.
It's, it's primarily done by machine these days. So you bring over the SMT line, the surface mount technology line.

Speaker 24 That line has machines that, first of all, are made all over the world. Right.

Speaker 24 Yeah, so that's already a different thing. But and then those machines have reels of components like capacitors.
The capacitors come from a factory in China. So you have to bring that factory over.

Speaker 24 That factory to make the capacitors has factories. So it uses factories for maybe ceramics or for aluminum or steel or copper, whatever they may use, copper coil for inductors.

Speaker 24 You have someone doing the winding for the coil

Speaker 24 for things like going power supplies. And all of that is down chain factories.

Speaker 24 So this one motherboard quote-unquote factory, what they're doing is effectively equivalent to someone assembling a pre-built computer in a pre-built computer assembly plant in the U.S. like Lenovo.

Speaker 24 They're doing the same thing. They're putting all the parts together, but they're buying them from elsewhere.
And that's fine. That's how it works.

Speaker 24 But to just bring that over, it's not something you can flip a switch on.

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Speaker 23 And it seems like a big part of it as well is that China already has this infrastructure to manufacture these things to your point that they have someone who can do the prototype that they have someone.

Speaker 23 I don't know, like, I assume there there are like screw factories and things that don't exist in America, or if they do, they are geographically inefficient in comparison.

Speaker 24 Yeah, I think that's a big part of it:

Speaker 24 there are factories in the U.S. that can do various things.
I mean, certainly, you get down to physical hardware like screws.

Speaker 24 I'm absolutely certain there's factories that make screws in the U.S., there's factories that make cardboard boxes in the U.S. But, like you said, these things are not on the same block.

Speaker 24 And while that can be reconciled,

Speaker 24 making a company eat an extra cost is basically impossible.

Speaker 24 And so if the approach is to do some form of taxes, it would have to be so extreme that there really is no other choice but to start building factories in the U.S.

Speaker 24 But the problem then is that this takes years. So

Speaker 24 right. Yeah, it would just, it just takes forever to start building.
I mean, then you've,

Speaker 24 it's also just it's an enormous amount of money. You can't just have it.
You know, you need to plan for it. So

Speaker 24 that's a big challenge.

Speaker 23 It kind of feels like that on the cynical side, I mean, it kind of feels like it is the case where it's so much of our economy is based on just cheap labor that we've outsourced our entire manufacturing to other countries

Speaker 23 and it all relies upon a certain kind of discount labor that just doesn't exist and probably can't exist in America.

Speaker 24 I think it not only can't exist in America, but

Speaker 24 the amount of available people is probably

Speaker 24 not high enough to create that many manufacturing jobs, especially instantaneously.

Speaker 24 One thing that's interesting, though, I don't think I've really spoken in

Speaker 24 anywhere about this side, but something that's interesting with

Speaker 24 contract manufacturing, especially in China, China, is at least for the factories we've toured and visited over the years, a lot of the contract factories,

Speaker 24 they shut down for Chinese New Year for a while. It's their biggest holiday.
So similar to Christmas in the U.S., you have several weeks off for a lot of people. And there it lasts pretty long.

Speaker 24 So the one factory we work with and we've toured, they shut down for nearly a month for Chinese New Year. And when...

Speaker 24 I once asked them, when it was my first time over there, I asked the factory owner, it was basically, hey, no, absolutely no disrespect. Don't take this the wrong way.

Speaker 24 I'm just curious, why such a long time? Like as an American, right, you come from a work culture in terms of just you're always at work.

Speaker 24 Four weeks is a big stretch of time. Doesn't that affect your production? And he said something really interesting to me where

Speaker 24 that factory in particular, a lot of their laborers come from all over. in China.
China's very large and they come from all these different provinces.

Speaker 24 And so they sort of migrate out to do the work locally at the factory and then they might go back and maybe they're going back to work at home or they just bring the money home and spend time with the family.

Speaker 24 And the interesting thing there is

Speaker 24 that kind of opened my eyes to

Speaker 24 how can a place like Shenzhen exist where

Speaker 24 Almost everything you need to make a product is in like one city. That seems insane, right? Like the amount of people you would need for that is crazy.

Speaker 24 And I guess that's part of it.

Speaker 24 And I don't, you know, obviously don't claim to be an expert in it, but just from personal experiences talking to people and visiting these places, these are kind of the pieces that have really clicked for me to help me better understand how manufacturing works.

Speaker 23 Yeah, it's just

Speaker 23 every time I think about what these tariffs are meant to do, I feel insane.

Speaker 23 Because it's like, okay, we're going to charge more for things to the people shipping them in, which will cause them to build things in America, which they can't do,

Speaker 23 but they should. Like, that feels like most of the logic here.
Like, that will just factories will sprout out of the ground like weeds. Like, it's just bizarre.

Speaker 24 Yeah, and even the companies that do make stuff here, this is what's interesting too, is that...

Speaker 23 Yeah, because you spoke to an actual manufacturing company in America.

Speaker 24 That's right. Yeah, so we spoke to

Speaker 24 three companies that we spoke to have sort of different levels of manufacturing here. So, there's one of them, the one you're probably referring to, is called Proto-Case.

Speaker 24 And

Speaker 24 they

Speaker 24 stamp cases. So, they assemble servers and network-attached storage devices, and

Speaker 24 then they can stamp their own cases for those.

Speaker 24 They take the metals, they put them in a big press with their own tooling, and they press it, and then they can kind of bend the metal into a server case.

Speaker 24 So, they do some manufacturing here, and they do a lot of it in Canada. The other two companies we spoke to are a different type of manufacturing where it's assembly.

Speaker 24 And actually, Coursera, to their credit, has assembly as well. So I guess three.

Speaker 24 And the assembly groups, so Cyber Power PC makes pre-built computers mostly for gaming. And they employ hundreds of people in the city of industry, California area.
to assemble computers.

Speaker 24 And so those people take about eight to ten components that Cyber Power does not make. They buy them from other companies and they assemble them right into a computer.

Speaker 24 And it's really that straightforward.

Speaker 24 But this is effectively a factory job. It's an assembly job.
And

Speaker 24 the PC that's made ultimately, it's branded a CyberPower PC, but just like any PC on the market, Dell, HP, Asus, it doesn't matter. They don't make the CPU.
They don't make the GPU.

Speaker 24 That's probably Intel, NVIDIA AMD.

Speaker 24 They often don't make the cooler, the storage device, the memory. So all this stuff, yeah, it's got to come from other people.

Speaker 24 And for the most part, the places it ends up coming from are going to be China, Vietnam, Thailand, Singapore, Malaysia,

Speaker 24 Taiwan, I don't think I named yet. And some stuff from Japan, but that's kind of the...

Speaker 24 That's where the stuff comes from. And then they assemble it in the U.S.

Speaker 24 But those companies that assemble the computers in the US, they still get hit by tariffs because they're bringing stuff in to complete the product. But what's interesting is

Speaker 24 it's almost like these components like CPs and GPs, you can think of them as raw materials where the products, the computer, can't exist without those raw materials, but they're not

Speaker 24 blanket exempted as raw materials.

Speaker 23 Yeah, and it feels like you can't actually exempt any particular industry because of the manifold different parts.

Speaker 23 I think Lewis Russman made the point as well, where it's customers are going to get pissed off about the price increases.

Speaker 23 And it's kind of like, well, you're the one buying these things that are made with Chinese parts. It's not like you can avoid that.

Speaker 24 Right. Yeah.
No, I mean, that was, that was an excellent point by him where he's he's a repair shop. And as he was saying, for the device to even get to him, someone else has to exist before him.

Speaker 24 And that's going to be the customer buying from the original manufacturer. If the original manufacturer chooses to make their product, let's say entirely in

Speaker 24 Detroit and they use parts entirely from Detroit, then Lewis, the repair shop, will probably buy replacement parts from Detroit because that's where they come from.

Speaker 24 And so it's, yeah, I think like him, just as much as the assembly plants that put a product together the consumer is familiar with, they're affected by the same thing, which is there's forces so much larger than you, you can't, you don't have the option to move it because it's not yours.

Speaker 24 And so, what do you do, right?

Speaker 23 Yeah.

Speaker 23 One thing,

Speaker 23 as we come to the end here, one thing that did strike me is, how did you get all of these competing companies to actually hang out and talk to you, quite candidly, at the same time?

Speaker 24 Yeah, it's I've known a lot of the people in that video I've known for

Speaker 24 pretty close to some of them like 12 to 14 years. Fortunately, like we've run across each other at conventions a lot.
And so for like the backstory, I guess Cyberpower and Ivy Power

Speaker 24 are two competing pre-built companies. And I pinged them both and I was like, hey,

Speaker 24 it would really send a message. If you guys agree with each other

Speaker 24 on this particular issue, I think it would help people

Speaker 24 understand that it is impacting both of you in similar ways. Because these are companies that they're fighting for the same market share, for the same customers.

Speaker 24 And,

Speaker 24 you know, if you can get them together in a room, and they were even sharing numbers with each other, how many employees they have, how many units per year they make.

Speaker 24 Like, this is crazy information to share.

Speaker 24 But I think it was sort of a solidarity moment where the read on the situation I had was the companies were all looking at this as

Speaker 24 this is our opportunity to try and explain why the prices are going to go up and whether or not it's for legitimate reasons or for the more cynical reasons we've discussed.

Speaker 24 To them, it was an opportunity to talk about that. And

Speaker 24 I think our timing was a big part of that, where we booked our tickets

Speaker 24 as soon as the pause went into effect on some of the international tariffs.

Speaker 24 Or actually,

Speaker 24 it was just before that. It was like a day before that.
So we booked the tickets a day before the pause, right around when they went into effect.

Speaker 24 We landed, and then some of these changes, like pauses and exemptions and non-exemptions, were happening already.

Speaker 24 But because of the chaos in that four-day window, I think everyone was willing to talk to us on record because nobody knew what was going on.

Speaker 23 And

Speaker 23 just to close us off, you mentioned it cost a ton of money and a ton of time. How long and how much money, roughly? Because this was,

Speaker 23 I do not watch videos of these lengths. Casey, Casey, friend of the show, Casey Kagawa, knows this well, but I watched the whole thing.
Like, how much? Like, roughly, because I want to make the video

Speaker 24 to make the video, so it was probably

Speaker 24 if you count my time at zero dollars, then

Speaker 24 we should have been over ten grand in total cost. Uh, so that's travel plus editing time.
It was a lot of editing time because we had over eight hours of footage.

Speaker 24 And the way it kind of came together, it was interesting where,

Speaker 24 you know, we got the news down the wire about

Speaker 24 the new,

Speaker 24 the word

Speaker 24 the government has officially named them is reciprocal tariffs. So when those came out, that was when we started booking the flights.
And like I said, it was right before the pause on some of them.

Speaker 24 And so we booked the flights with no return flight. It was a

Speaker 24 12 hours away until we got on that first plane. We had the first hotel booked, and

Speaker 24 then Vitaly and I, my camera operator, we flew out there and we played it day by day. And I used a hotel I knew, so it was basically like, hey, yep, we need to extend one more day, you know, and

Speaker 24 then we just kept booking them based on who I could get in touch with.

Speaker 24 I was just on the phone constantly calling every company I knew. And they're kind of all in the, you know, they're either in San Francisco or they're in LA from for most of them.

Speaker 23 Stephen, it's been such a pleasure having you on the show. Where can people find you?

Speaker 24 They can check out gamersnexis.net if they want the written adaptation of videos or the YouTube channel GamersNexis is where everything goes.

Speaker 23 And you can find me on the internet. You are listening to Better Offline, of course.
Following this will be an extremely old liner that I swear I'll update one day.

Speaker 23 Thank you for listening, and Stephen, thank you for joining us.

Speaker 24 Thank you.

Speaker 14 Thank you for listening to Better Offline.

Speaker 28 The editor and composer of the Better Offline theme song is Matosowski. You can check out more of his music and audio projects at matosowski.com.
M-A-T-T-O-S-O-W-S-K-I dot com.

Speaker 14 You can email me at easy at betteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter.

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