Scalpers who buy graphics cards and game consoles just to resell them at extremely inflated prices is a problem. And iD Software co-founder John Carmack has an idea for how to stop it, as it stretched Twitter last night. What if producers simply auctioned their own stock directly to consumers?
“It would be better for us to have a transparent bidding system directly from producers and a more efficient market,” he wrote.
I’m not sure there are enough words to express them how horrible an idea is. Not only is it flying in the face of business ethics and entering troubled legal territory at the federal level, but it is also tangling with the usual supply chain and could make it more difficult than it is now for people to get their hands on a RTX 3080 or a PS5.
In a previous life, I worked for a small middle company in the semiconductor industry for a few years, so let me break down the production process. As an example, luses tcalled toroidal cores, which are thick rings with magnetic properties usually made of iron (but may contain other metallic elements). If you were to open the computer’s power supply, you would find one there.
A raw material company sells iron powder to the company that produces the cores. The company then uses its equipment to press power into the base models, then paint it and then sell it directly to the company that makes the power supplies or sell it to distributors who then sell it to the companies that make the power supplies. Companies that makes the power supplies sell directly to companies like NZXT that provide PC building services, or sell them to retailers like Micro Center, which provides complete PC components to consumers who want to build their own PCs.
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This is the supply chain everyone keeps talking about it in the middle of the current lack of chips. Computers and consoles need a lot of components to make them work, down to raw materials and small parts, such as toroidal cores. If there is a shortage at any time along the way, supply becomes low, prices rise, and consumers have to wait quite a long time while before he can get his hands on those products at a normal price.
When scalpers come in and buy all the GPUs and consoles, they create a false deficiency keeping the end products on the normal marketplace. Suggesting Nvidia, AMD, Sony and Microsoft to keep their end provision outside the normal marketplaces and forces users to walk directly to them to buy graphics cards would not in itself create the false lack, but having those companies auction their usual stock to the largest bidder would be – nIt should be noted that it would upset many consumers.
Celiminating distributors would also be be a terrible idea for Nvidia, AMD, Sony and Microsoft, which relies on retailers or production / distribution agreements with companies such as Asus and MSI to sell their products. Not only should those companies take on the entire distribution task on their own, but combined with a bidding process. that Carmack says “should have a better network for consumers in the end” if all producersHe took part, which also opens all those companies to potential Violations of Sherman law (legislation preventing anti-competitive behavior and pricing).
When it comes to auctions and bidding specifically, Sherman law prohibits anything that could be seen as a bidding or pricing behavior, contrary to a competitive market. Signs of this include price increases which are not in line with the increase in costs at any point in the manufacturing process which I have described above, and bid prices that fall when a new or rare bidder submits a bid.
Complete elimination of distributors and move to this manufacturer-the process of direct action could be interpreted as an increase in prices which does not match the increase in the natural price, andn the supply chain – not to mention that it would probably adversely affect businesses as Micro Center which sells entire PC components to consumers.
Carmack’s thread naturally attracted a few comments. some pointed out that scalpers may still decide to try to win a GPU or console at auction. If companies somehow recognize that the bidder is a scalper and have adjusted the bid price to be more reasonable, this could put them in a situation where they are being investigated by the DOJ for collaboration.
TThe 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 must be resolved by federal law. But until there is this legislation, the only way we can stop scalpers is not to buy from scalpers – even if you have the money to spend on a $ 1,000 RTX 3070. Be patient and wait for more stocks to come on the market. Scalpers will continue to scalp as long as they think there is a demand. If manufacturers auction its own stock just keep the products out of regular consumers hands, because only the rich can afford it. It’s no different than what scalpers do.