My two Cents to Jay`s Video, Is it really the End?

I love Jay and the B2B business that I have been running in the water cooling industry for many years. It is undoubtedly a difficult year. The general conditions in Europe and China make it challenging for manufacturers and distributors. However, talking about an end is an exaggeration. Some market participants will adapt, but they will not disappear.

 This year has shown that the demand for cooling products has decreased. This is due to few product innovations and the reduced need for upgrades among customers. I only partially agree with the view that custom water cooling systems are a luxury. If that were true, there would be no car tuning scene – and it exists. The same applies to custom-built PC systems and their cooling solutions. Customers will always strive for them.

 However, it is true that the new customer segment in the consumer market is less willing to build themselves. Most customers prefer simple or pre-built solutions. The build-to-order segment for consumers has also experienced a surge in recent years. It remains to be seen if this trend will continue.

 Water cooling systems will remain, but the customers will change. In the consumer market, this area will continue to be a niche, as it requires a lot of knowledge and consultation. Some consumers will stick to AIO solutions, while others will prefer air cooling – and that’s okay. Water cooling systems will continue to be relevant for industrial customers in research and data centers. The latter has seen strong support, as EU energy-saving regulations are prompting more and more data centers to use energy more efficiently. Water cooling systems and fixed water cooling installations make a significant contribution to energy savings and utilization.

 In Jay’s report, it is pointed out that Aquatuning and EKWB are facing problems. For Aquatuning, I can say that these problems have always been manageable, and the management is aware of and has control over them. As for EKWB, I lack insight into their internal processes, but personnel changes and the closure of departments, as unpleasant as they may be, do not signal the end of EKWB. Downsizing and restructuring will be manageable for EKWB.

 The situation in China is much more dramatic. Many manufacturers are family-run businesses and receive little support from the government and banks. The banking crisis, triggered by the real estate crisis in the construction industry, has severe consequences for the entire Chinese economy. Many companies are under significant pressure and are trying to boost demand through very low prices. Many managers in China lack insight into the Western world. They only see the raw numbers: fewer orders and fewer items per order create high pressure on costs, the procurement of necessary manpower, and raw materials.

The declining demand is leading to a wave of dumping, which in turn is not cost-effective, resulting in a wave of bankruptcies among many companies in China. The few surviving companies can further lower prices in some areas and drastically increase them in others. In the coming months, AIOs will continue to be under pressure, while the prices for DIY products will rise, as their production can hardly be automated. AIOs are finished products that can be easily compared, automated, and marketed. DIY products, on the other hand, require specific customer knowledge and expertise, making sales and marketing a challenge that many factories in China are not equipped to handle.

 The Chinese market is still not a DIY water cooling market. Customers are not willing to spend the money on DIY liquid cooling, and they lack the necessary knowledge. Therefore, many locally opt for cheap air cooling or simple AIOs. In the West, particularly in the USA and Europe, the purchase of DIY water cooling systems was avoided during the peak of inflation. The sales of AIOs also slightly declined, with more people opting for air cooling or postponing their new gaming PC projects.

 It is expected that the numbers will be better next year than in 2024. Nvidia and AMD have announced new processors. Whether Intel can rise from its current crisis remains to be seen and will certainly have an impact. Additionally, some important PC game titles will be released.

 Therefore, I do not see the current situation as the end, but rather as a market correction. During the Covid years, the market overperformed, and this is now being balanced out. It is becoming apparent that the market is gradually returning to the numbers of 2019.

Only the situation in China and the pressure to be cheaper than is healthy are causing problems for some market participants. But these are challenges we have faced and solved before.

This article is an opinion piece, reflecting my personal assessment and perspective. Surely, each of you has your own opinion on this matter, and that’s perfectly fine. I found the mention of Aquatuning without a basis and without citing facts to be inappropriate. However, he is entitled to his opinion that Aquatuning is facing problems due to the current situation. I just see it differently.