Heaters that buy graphics cards and game consoles just to resell them at hugely inflated prices is a problem. And iD Software co-founder John Carmack has an idea of how to stop it, as he explained. Twitter Last night. What if manufacturers simply auctioned their own stock directly to consumers?
“We would be really better off with a transparent auction system directly from manufacturers and a more efficient market,” he wrote.
I’m not sure there are enough words to express how terrible this idea is. Not only does it fly in the face of business ethics and delve into murky legal territory at the federal level, but it also becomes entangled with the usual supply chain and can make it harder than it is now for people to put if in hands RTX 3080 or a PS5.
In a previous life, I worked for a small media company in the semiconductor industry for several years, so let me break down the production process. As an example, we use things called toroidal nuclei, which are thick rings with magnetic properties usually made of iron (but which may contain other metallic elements). If you open your PC’s power supply, you’ll find one.
A raw material company sells iron powder to the company that manufactures the cores. This company uses its equipment to press the dust against the basic models, paint them and can sell them directly to the company that makes the PSUs or they can sell them to the distributors who sell them to the companies that make the PSUs. Companies that make PSUs can sell them directly to companies like NZXT that provide PC building services or sell them to retailers like Micro Center that provide whole PC components to consumers who want to build their own PCs.
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This is the supply chain that everyone keeps talking about in the middle of the current shortage of chips. Computers and consoles need many components to make them work, even raw materials and small parts like toroidal cores. If there is a shortage at some point along the way, supply is scarce, prices are rising and consumers have to wait quite a while before they can get these products at a normal price.
When scalpers come in and buy all the GPUs and consoles, they create a false shortage by keeping the end products out of the normal market. Suggesting to Nvidia, AMD, Sony and Microsoft to keep their end devices out of the normal market and force users to go directly to them to buy graphics cards would not create the false shortage in itself, but having these companies auction their usual stocks to the highest bidder, not to mention, would annoy many consumers.
Eliminating resellers would also be a terrible idea for Nvidia, AMD, Sony and Microsoft, who rely on retailers or manufacturing / distribution agreements with companies like Asus and MSI to sell their products. These companies should not only take on all the distribution work for themselves, but combined with an auction process that, according to Carmack, “should be better for consumers in the end” if all manufacturers were involved, this will also open all these companies to potential Violations of the Sherman Act (legislation that prevents anti-competitive behavior and pricing).
When it comes to specific auctions and bidding, the Sherman Act prohibits anything that may be seen as bidding or pricing conduct at odds with a competitive market. Signs of this include price increases that do not match cost increases at any point in the manufacturing process I described above, and bid prices that go down when a new or infrequent bidder submits a bid.
Completely remove the distributors and move to this bird directly from the manufacturerThe process of tion could be interpreted as an increase in prices that do not coincide with the increase in natural prices in the supply chain, not to mentionIt would probably negatively affect companies like Micro Center that sell integral PC components to consumers.
Carmack’s thread naturally drew some comments. Some pointed out that scalpers might still decide to try to win a GPU or console at auction. If companies somehow recognized that the bidder was a climber and adjusted the bid price to be more reasonable, this could put them in a situation where the DOJ is investigating them by collusion.
The process Carmack suggests would cause more problems than it would solve. The scalping problem cannot and will not be solved at the manufacturer level. It needs to be resolved with federal law. But until such legislation exists, the only way to curb scalpers is to not buy from scalpers, even if you have money to spend on a $ 1,000 RTX 3070. Be patient and wait for more stocks to hit the market. Climbers will only continue climbing as long as they think there is a demand. If manufacturers auction off their own stocks, it only keeps the products out of the hands of regular consumers, because only the rich can afford them. This is no different than what scalpers do.