Friday, April 22nd 2022
EKWB Lays Off 25% of Workforce, Blames Lower Watercooling Sales
EK Water Blocks, possibly the most notable manufacturer of DIY PC cooling solutions, has downsized a quarter of its staff in response to a sharp drop in sales. This affects over 60 of the 200+ tech jobs in Slovenia, the home country of EKWB, something it proudly flaunts. EKWB sees its sales principally split in half between the North American and European markets. The company's market-presence in Asia is limited at this time, although it is now a reinvigorated area of interest. The company noticed quarterly sales-drops in steps as big as 20 percent since October 2021, according to Slovenian press reports.
The company is faulting these sales drops on the COVID-19 pandemic, specifically its economic impact, spike in PC hardware prices, and people spending less on premium/novelty hardware that EKWB principally specializes in—DIY liquid cooling solutions. The company also noted the impact of the war in Ukraine causing various commodity shortages for manufacturers in Europe. Matjaž Krč (CEO, EKWB) in a statement even blamed the sociological impact of COVID-19, specifically gaps between pandemic waves that enable people to travel and enjoy the outdoors—not wanting to spend on things that keep them indoors, such as gaming.
It's pertinent here to add some context to this situation. EKWB had observed consistent financial growth over the past five years, including the pandemic quarters leading up to Q4-2021. The company was awarded by Slovenian chambers of commerce for its consistent growth and fiscal prudence. The company even expanded its payroll in 2021, by recruiting 64 new employees.
TechPowerUp spoke with EKWB and received this official statement from the company:
TechPowerUp: What was the time period that this 25% reduction is based on? Some ex-employees are claiming closer to 70 personnel laid off recently, and even more over the past couple of months.
EKWB: As mentioned, the 25% reduction happened as a one-time measure to optimize our operations. We grew rapidly in 2020 and 2021, recording more then 30% growth year to year. There was of course some fluctuation during this period, in 2021 4% to be exact. Which is really low compared to benchmarks in our industry. To put things a bit more into perspective: EK took part in Gallup poll of employee engagement survey in 2021 and we are in 6th percentile on a global level (only 6% of companies globally have more engaged employees than EK). We were and still are striving for best working environment. Shortly, EK was and still is one of the best places in the world to have career.
TechPowerUp: What would you say to those who will ask why not cut down on marketing events such as booths at PAX East etc?
EKWB: We had to adjust company to demand while structure company for growth. In terms of vision and strategy, nothing changed. We are dedicated to our vision of elevating computers for the better world. EK is a strong global brand and it is normal to be present in worldwide events such as PAX. Compared to larger hardware players, our presence is always more creative and we are creating significant impact with modest investments.
As said before, our presence on the global market will remain strong.
TechPowerUp: Going through LinkedIn earlier, it seems most of the people let go were R&D engineers/technology personnel. Will this affect future product plans? There don't seem to be any business/department managers let go.
EKWB: The reduction of employees was done almost proportionally in every department (with focus on future growth), R&D is our core domain and most of outstanding innovations are coming from this core, so it remains an integral part of EK.
(end of questions)
This downsizing is unlikely to threaten the company's existence, as it appears to be making business changes to stay relevant to the market. For starters, despite being a DIY water cooling components specialist, the company is making further inroads on the highly saturated pre-assembled all-in-one (AIO) coolers market, with entrenched players such as Antec, Cooler Master, Corsair, and Thermaltake all fighting for market share. It even showed off certain air-cooling solutions in recent EKWB Expo online-events, and this is on top of the enterprise and OEM business it does. Certainly change is a must as the DIY cooling consumer market is seeing several smaller brands disappear, and others having fallen prey to debt defaulting. Regardless of how you feel about this, losing jobs is never something we want to see, and we wish everyone who was laid off the best for their future endeavors.
The company is faulting these sales drops on the COVID-19 pandemic, specifically its economic impact, spike in PC hardware prices, and people spending less on premium/novelty hardware that EKWB principally specializes in—DIY liquid cooling solutions. The company also noted the impact of the war in Ukraine causing various commodity shortages for manufacturers in Europe. Matjaž Krč (CEO, EKWB) in a statement even blamed the sociological impact of COVID-19, specifically gaps between pandemic waves that enable people to travel and enjoy the outdoors—not wanting to spend on things that keep them indoors, such as gaming.
TechPowerUp spoke with EKWB and received this official statement from the company:
During the first quarter of 2022 EK, the leading computer liquid cooling solutions provider, observed signs that consumer spending was starting to decline in response to global events. Despite forecasting a reduction in demand for EU and USA during our 2021 Global Summit, the onset of conflicts in Ukraine saw sales drop below these expectations.As a follow-up, we also got responses for a few quick questions we asked the company when we first got whiff of the development:
In response to these trends which indicated moderate willingness to spend, EK is taking early precautions to streamline our operations in Slovenia. Regretfully this involved a reduction in the number of employees by approximately 25%. Further plans were also initiated that will see EK enter new geographical markets and sales channels with more outstanding and innovative products.
Now more than ever EK is committed to delivering the quality and experience our loyal customers demand. We sincerely hope our actions will permit us to do this long into the future.
TechPowerUp: What was the time period that this 25% reduction is based on? Some ex-employees are claiming closer to 70 personnel laid off recently, and even more over the past couple of months.
EKWB: As mentioned, the 25% reduction happened as a one-time measure to optimize our operations. We grew rapidly in 2020 and 2021, recording more then 30% growth year to year. There was of course some fluctuation during this period, in 2021 4% to be exact. Which is really low compared to benchmarks in our industry. To put things a bit more into perspective: EK took part in Gallup poll of employee engagement survey in 2021 and we are in 6th percentile on a global level (only 6% of companies globally have more engaged employees than EK). We were and still are striving for best working environment. Shortly, EK was and still is one of the best places in the world to have career.
TechPowerUp: What would you say to those who will ask why not cut down on marketing events such as booths at PAX East etc?
EKWB: We had to adjust company to demand while structure company for growth. In terms of vision and strategy, nothing changed. We are dedicated to our vision of elevating computers for the better world. EK is a strong global brand and it is normal to be present in worldwide events such as PAX. Compared to larger hardware players, our presence is always more creative and we are creating significant impact with modest investments.
As said before, our presence on the global market will remain strong.
TechPowerUp: Going through LinkedIn earlier, it seems most of the people let go were R&D engineers/technology personnel. Will this affect future product plans? There don't seem to be any business/department managers let go.
EKWB: The reduction of employees was done almost proportionally in every department (with focus on future growth), R&D is our core domain and most of outstanding innovations are coming from this core, so it remains an integral part of EK.
(end of questions)
This downsizing is unlikely to threaten the company's existence, as it appears to be making business changes to stay relevant to the market. For starters, despite being a DIY water cooling components specialist, the company is making further inroads on the highly saturated pre-assembled all-in-one (AIO) coolers market, with entrenched players such as Antec, Cooler Master, Corsair, and Thermaltake all fighting for market share. It even showed off certain air-cooling solutions in recent EKWB Expo online-events, and this is on top of the enterprise and OEM business it does. Certainly change is a must as the DIY cooling consumer market is seeing several smaller brands disappear, and others having fallen prey to debt defaulting. Regardless of how you feel about this, losing jobs is never something we want to see, and we wish everyone who was laid off the best for their future endeavors.
90 Comments on EKWB Lays Off 25% of Workforce, Blames Lower Watercooling Sales
RGB on blocks should be optional and not built into it, I dont want to have wires for a feature hanging off my block that i dont want.
On the other hand, EK makes blocks for cards that other companies do not
Things are only getting hotter, water cooling isn't going away, having a heavy triple slot cooler reduced to a single slot is really nice.
Hope they get their issues worked out, would hate for them to go under, that would only leave the asians in the game and look where that got us during the past 2 years
Maybe the next gen cards will have more headroom and EK will have a resurgence. But it has been shifting towards vendor blocks and AIO for a while.
Come on, 200+ people building vanity toys for rich kids? I know a company manufacturing automotive alternators for the mass market which employs around 220-250 people, and they have two factories working 24/7
Furmark isn't singled-out as a power virus any more, it's just accounted for by the default driver behaviour which sees furmark draw the full TDP of the card in most cases, and dials back clockspeeds to maintain the card at it's rated power limit. Nvidia are pretty strict about power limits, with many cards not having the ability to overclock more to more than 110% of the default TDP.
Your argument doesn't hold up, the rest of the PC market has seen huge increases in sales. Companies like arctic are selling everything they can make. The GPU shortage is still going on. Other water cooling companies are bringing in new products all the time.
I agree they likely have too many people.
The Statement itself is a big middle finger to the people let go: “EK is taking early precautions to streamline our operations in Slovenia. [...] Further plans were also initiated that will see EK enter new geographical markets and sales channels with more outstanding and innovative products.”
Management talk at it's finest, employees are just assets to be dropped at a whim.
On the bright side, you can always resort to other companies with custom water cooling. Aquacomputer has been great in those days, in terms of quality. You could find cheaper but solid alternatives nowadays.
My high-end full suspension trail bike is full of expensive components (some of them probably considered boutique) that are made in the US, Switzerland, Spain, Italy, and Japan, in comparatively low quanitiy in places with more expensive labor. None of them would be considered a good value really but at the same time they are not vastly outside the price range of similar components made Taiwan or China and aside from just being really well made and bling factor offer something that is functionally different.
The fact that EK quality apparently isn't that great and the staff they just laid off is from the engineering side of things doesn't exactly paint a rosy picture for whats happening there.
I think other posters in this thread also pointed out: GPUs are getting harder to mod in any case. Not only because they're so expensive and your warranty goes bust if you start mucking around with the fans... but also because reference-models with crappy fans seem to be more difficult to obtain these days.
I've never made a custom-cooling solution before, but I think my next rig would be willing to try one out. I'm sold on the idea that paying for higher-quality components and larger pumps can lead to more reliability.
Also worth mentioning is that one should be very wary with spending the money on any kind of pre-orders at this point in time. If they default on their debt the creditors or banks may seize the assets. Seen too many times.
Pay for goods on stock, not on pre-order!
So news like this doesn't surprise me a bit - probably many folks finding themselves in a similar boat to what I'm in - lack of availability and pricing so astronomical that many folks, a.) Can't find a GPU to begin with, or b.) Simply are not willing to pay ludicrous pricing for them and so choose to wait, rendering the aftermarket companies selling less and less product.
You used to be able to assemble a good gaming computer for 2K, now you will spend that much on the GPU and board leaving fewer dollars to spend on water cooling
Add in the fact that crypto farms would rather leave GPUs as is for warranty than to add liquid cooling and they purchased a large share of new cards.
Crypto is the black cancer death of gaming for a lot of people, no one wants to chance a older card that’s still overpriced if it was damaged in a crypto farm. Nvidia and AMD did little to nothing to stop the hurt to gamers, retailers like Newegg only raised prices and fattened their margins.
Well I do know I had issues with 3 fans from them they replaced them and even didn't ask me for them back. They work just are louder then they should be so can still use them in a build where they are muffled
As a few others here have mentioned hardware no longer has the overclocking headroom it used to, Silicon Lottery's death is a clear indication of this, with Intel releasing KS variants that are just binned samples for a price premium and AMD having CPU's that are largely not worthwhile overclocking vs the single core boost performance you have to sacrifice for a slight bump in all-core.
Then GPU's have genuinely fantastic stock cooling solutions, I love water-cooling but I see no performance uplift from doing so to my 3080 FTW3 Ultra. The limiting factor isn't temperature or voltage but rather power delivery which is another issue I won't get into.
When you combine the above with EKWB's terrible QC and even worse customer experience when you have to RMA a product I'm not surprised they are struggling. It took me two months to RMA one of their Magnitude blocks (I know there are a lot of cheaper options I just enjoyed what it looked like). And that wasn't years ago, that happened this year in 2022. It was cheaper and faster for me to order a new unit off Amazon and ship it to the Southern Hemisphere than it was for EKWB to even respond to my RMA ticket with a course of action. That right there destroyed any brand loyalty I had, and not to mention what money I lost on import taxes due to their mess.
I feel sorry for the passionate people working there who were let go when their executives need a swift kick in the pants but I do hope change occurs at the top. I like their products but I just can't bring myself to buy it again until their QC and RMA departments are overhauled.
Economics 101
No sells = No revenue
So it seems like a valid reason to layoff people since they/ ek aren't willing to bend to the market and lower prices.