News John Carmack Proposes a Way to Fight GPU & Console Shortages

[Admin]

Game developer proposes 'transparent' auctions to fight hardware shortages.

John Carmack Proposes a Way to Fight GPU & Console Shortages : Read more

 

[hasten]

This is a precedent I would not like set. Talk about making it easy on them for price fixing and market manipulation. If demand is this high without supply to match this will happen. I could see this driving prices even further up as there would be no cards at an msrp so the secondary market would inflate even greater.

 

[epobirs]

I had the same idea a while back, primarily in regard to consoles, which are less complicated than video cards with myriad vendors producing products based on OEM chips and reference platforms.

For consoles, just going through Ebay should work just fine, so no need to create an auction site from the ground up. Ebay has the capability to create sub-stores to separate a specific seller from the millions of others who might seek to create deceptive auctions for products they cannot deliver. Amazon had its own auction system in the past and still operates an auction operation for liquidation of bulk items. If those two channels are kept happy, it's strikes me as very unlikely the likes of Walmart and Best Buy would seek retribution. If anything, removing the console sales from their stores is doing them a favor, as these are bulky items with almost no margin after all is said and done. These retailers care a lot more about selling the software and accessories. (Apple has cut out retailers entirely from software sales but still keep them onboard with accessories at strong margins. The day when consoles do the same is looming as the current generation is making models without any support for physical media widely accepted and likely the norm in the generation to follow.)

Consumers will ultimately benefit from letting affluent early adopter outbid each other in a way that directly benefits the console makers rather than scalpers. The platforms represent an immense sunk cost on the day of launch and need to move a significant amount of software before that investment is paid off and the companies can begin to schedule price cuts. (Yes, a flailing company with an unwanted product might also reduce prices but that is usually accompanied by poor software support as third parties avoid or flee the platform.) If there are a million people in the world willing and able to pay $1,000 for a PS5 or Series X, I say let them. Pay off those development costs that much sooner and advance the date when the toy is made more affordable to the rest of us.

 

[hasten]

I had the same idea a while back, primarily in regard to consoles, which are less complicated than video cards with myriad vendors producing products based on OEM chips and reference platforms.

For consoles, just going through Ebay should work just fine, so no need to create an auction site from the ground up. Ebay has the capability to create sub-stores to separate a specific seller from the millions of others who might seek to create deceptive auctions for products they cannot deliver. Amazon had its own auction system in the past and still operates an auction operation for liquidation of bulk items. If those two channels are kept happy, it's strikes me as very unlikely the likes of Walmart and Best Buy would seek retribution. If anything, removing the console sales from their stores is doing them a favor, as these are bulky items with almost no margin after all is said and done. These retailers care a lot more about selling the software and accessories. (Apple has cut out retailers entirely from software sales but still keep them onboard with accessories at strong margins. The day when consoles do the same is looming as the current generation is making models without any support for physical media widely accepted and likely the norm in the generation to follow.)

Consumers will ultimately benefit from letting affluent early adopter outbid each other in a way that directly benefits the console makers rather than scalpers. The platforms represent an immense sunk cost on the day of launch and need to move a significant amount of software before that investment is paid off and the companies can begin to schedule price cuts. (Yes, a flailing company with an unwanted product might also reduce prices but that is usually accompanied by poor software support as third parties avoid or flee the platform.) If there are a million people in the world willing and able to pay $1,000 for a PS5 or Series X, I say let them. Pay off those development costs that much sooner and advance the date when the toy is made more affordable to the rest of us.

You are fooling yourself if you think that the extra money earned is going anywhere other than the balance sheet and then to the shareholders. Price cuts are a result of demand not going black.

That sets an expectation the consumer doesn't want. This launch is an exception and making a hasty move like that is going to corrupt the market moving forward when there isn't an outlier.

 

[Giroro]

"It won't be as overpriced if it were just more expensive"
-a famous multimillionaire who expenses all his personal computers to Facebook

"It's already expensive because we've always been overpriced"
-Apple, Trillion dollar company

Well, I can't argue against the economics...
I'm sure customers would love to pay the kind of markup that Nvidia and Intel enjoy when they auction their server chips off to big businesses. We definitely have that kind of money.

 

[vanadiel007]

I said this before, and I will say it again: any board partner who is not able to sell at MSRP receives no more chips until they do sell at MSRP. It's that simple.
It will not prevent scalping, but it will ensure that each card was sold at MSRP value initially, even if it was to a scalper.

If they then go a step further and form an alliance with all major retail outlets like Amazon, Ebay, Best Buy, Newegg etc... to prevent the listing of products like computer hardware above MSRP value, scalpers will have a hard time selling their goods in the market place.

What should be proposed is a maximum price cap, enforced by retailers and producers, to prevent excessive prices on products and lower the ability of scalpers to offer products at retail outlets.

 

[itzmec]

Cards will be available way before the logistics of something like this gets put in place. I have a better idea. Maybe we could get Elon Musk to sell all his BTC and pop that bubble.

 

[ingtar33]

For consoles, just going through Ebay should work just fine, so no need to create an auction site from the ground up. Ebay has the capability to create sub-stores to separate a specific seller from the millions of others who might seek to create deceptive auctions for products they cannot deliver. Amazon had its own auction system in the past and still operates an auction operation for liquidation of bulk items. If those two channels are kept happy, it's strikes me as very unlikely the likes of Walmart and Best Buy would seek retribution. If anything, removing the console sales from their stores is doing them a favor, as these are bulky items with almost no margin after all is said and done. These retailers care a lot more about selling the software and accessories. (Apple has cut out retailers entirely from software sales but still keep them onboard with accessories at strong margins. The day when consoles do the same is looming as the current generation is making models without any support for physical media widely accepted and likely the norm in the generation to follow.)

Consumers will ultimately benefit from letting affluent early adopter outbid each other in a way that directly benefits the console makers rather than scalpers. The platforms represent an immense sunk cost on the day of launch and need to move a significant amount of software before that investment is paid off and the companies can begin to schedule price cuts. (Yes, a flailing company with an unwanted product might also reduce prices but that is usually accompanied by poor software support as third parties avoid or flee the platform.) If there are a million people in the world willing and able to pay $1,000 for a PS5 or Series X, I say let them. Pay off those development costs that much sooner and advance the date when the toy is made more affordable to the rest of us.

no, auctions are sales where the highest bidder wins. in essence, prices would only go up across the board as game companies would now have a financial motivation to scale back supply in order to inflate price. want $5000 rtx GPUs? this is how you get them in less then a year. if you think the prices now are inflated wait till you give the manufacturers an auction system to game. If you are operating under the illusion that prices would come down across the board for hardware you're deluding yourself, the manufacturers could endlessly manipulate how many units are on sale to artificially keep the prices high, or atleast to prevent a price crash. there would never be another "sale" on gpus, even older generation units would sell for around "presumed" msrp forever.

The current market is designed around supply out stripping demand (slightly) so that manufacturers can make $$ on margin through volume, it's consumer friendly. change the fundamentals of the market by cutting out the distribution chain and store fronts and allow manufacturers to auction their products and the market will change from a volume sales model to a rarity model.

Imagine every new tech release being sold in a Barrett Jackson style auction, and that's what would happen to the tech industry. high end products will never be affordable again.

 

[bigdragon]

I love Carmack's work and many of his ideas, but this one is a dud. Using an auction mechanism would just insure gaming becomes a plaything of the rich or influential. Do we really need to push things further towards one of those depressing futuristic movies where the haves vs the have-nots is the central theme?

Nvidia, AMD, and partners have all the tools they need to fix this problem. Sell the cards through GeForce experience. Sell the cards via Steam or Epic. Sell the cards on storefronts that can 100% separate gamers from miners AND limit quantities per account. If you want products to reach gamers, then sell the products on the platforms gamers use and have libraries, game time, friends, and all sorts of other data. These same platforms can already limit digital item and DLC purchases per account too -- sell the graphics cards using the right storefronts if you want to reach gamers.

The same goes for Sony and Microsoft. Sell hardware via the digital platforms. Prioritize consumers with the longest account history or the broadest library. Limit 1 console hardware purchase per account. Stop relying on Amazon, Walmart, Target, Best Buy, and other resellers to screw things up.

 

[Loadedaxe]

@bigdragon has the best idea that I have seen so far.

An auction would just make things worse and would only inflate the industry.

Honestly, I see this all getting a lot worse over the next year. Everyone thinks this is going to go away. Its not, not as long as the Elon Musks of the world keep dumping millions of dollars into cryptocurrency.

I am getting up in age and gaming is no longer a priority for me. This PC I have will get me through until I quit gaming entirely and I wont have to worry about this mess

 

[cloud7s7]

I gave up on this garbage. I will be just fine with my 1070 TI for a while to come along with the massive backlog of Steam games to play and re-play. Screw miners, scalpers, and the card makers for enabling both of the former.

 

[Deleted member 14196]

John Carmack should stick to writing software

 

[Heat_Fan89]

Nvidia, AMD, and partners have all the tools they need to fix this problem. Sell the cards through GeForce experience. Sell the cards via Steam or Epic. Sell the cards on storefronts that can 100% separate gamers from miners AND limit quantities per account. If you want products to reach gamers, then sell the products on the platforms gamers use and have libraries, game time, friends, and all sorts of other data. These same platforms can already limit digital item and DLC purchases per account too -- sell the graphics cards using the right storefronts if you want to reach gamers.

The same goes for Sony and Microsoft. Sell hardware via the digital platforms. Prioritize consumers with the longest account history or the broadest library. Limit 1 console hardware purchase per account. Stop relying on Amazon, Walmart, Target, Best Buy, and other resellers to screw things up.

I've been saying the same thing the last couple of months. Sell consoles exclusively thru the XBOX console and Playstation console. Tie the console to the gamertag just like they do with digital games. After 8-10 months open it up to retailers.

But i'll remind everyone, this has been going on since the Playstation 2 when it was launches in 2001. There were people selling their PS2's 2x-4x times MSRP then using the proceeds to later buy the console for free.

It's just gotten out of hand now because more people have been forced to stay at home with too much idle time on their hands.

 

[Chung Leong]

I said this before, and I will say it again: any board partner who is not able to sell at MSRP receives no more chips until they do sell at MSRP. It's that simple.
It will not prevent scalping, but it will ensure that each card was sold at MSRP value initially, even if it was to a scalper.

That'd quickly earn you a massive fine from the EU antitrust office. You can't use your market dominance to bully other companies into doing what they don't want to do.

 

[bigdragon]

But i'll remind everyone, this has been going on since the Playstation 2 when it was launches in 2001. There were people selling their PS2's 2x-4x times MSRP then using the proceeds to later buy the console for free.

Oh wow, that really takes me back. I worked retail at Sears back when the PS2 fat was hot. I remember a couple of people buying several at a time on multiple different trips. There was nothing I could do about it because those people would just claim they had multiple children or were buying for friends and family. There was always something they could say to get around any quantity limits. Nobody had rewards accounts, purchase analytics, credit monitoring, or any of that back then. Today companies have soooo much data, but they primarily use it to study trends and drive profits -- not enforce limitations.

 

[danlw]

I don't think companies like EVGA should be forced to sell at MSRP, but their pricing should be "within reason". (to be fair, I think EVGA's current pricing is reasonably above MSRP) I say this because if they put a better cooling solution on a card, it is going to cost more money. If they had to sell MSRP, they wouldn't be able to put as good a cooling solution on, never mind AIO water coolers and waterblocks for custom loops. This is why I am willing to pay a premium for an EVGA card or Asus tuff gaming card... if I can ever get my hands on one. I am willing to pay a premium for a better and quieter cooling solution than what the founders edition has to offer.

But there is no way I'll pay a scalper premium... especially when there is a decent chance that what I'll get is a box with a brick in it.

 

[HyperMatrix]

Less idiotic way of doing it....at least for consoles...physically tie the hardware to a specific PSN/Xbox ID before purchase. Only allow that ID to login and play 6 months after purchase. Even if scalpers create new/fake PSN/Xbox accounts, it will be worth less than an actual retail unit because it means whoever they’re trying to sell it to will not be able to use their own account to play. More strict than that? Only sell to people with pre existing active accounts.

Auction based system where all the rich people like carmack get their goods and regular folk don’t even have a chance at getting one is beyond stupid.

 

[Co BIY]

Or they could just keep making cards until the market is satisfied. (easiest, most practical, and has a pretty good track record)

TSMC, Samsung and intel are all building more production capacity.

I see no business problem for AMD or Nvidia. They are selling everything they can build. The idea that they should prioritize gamers over "Miners" makes no business sense.

High prices are a not a market good but they are a market signal. The signal is being received but building Fabs and all the ancillary things is not a small project or cheap.

 

[epobirs]

You are fooling yourself if you think that the extra money earned is going anywhere other than the balance sheet and then to the shareholders. Price cuts are a result of demand not going black.

That sets an expectation the consumer doesn't want. This launch is an exception and making a hasty move like that is going to corrupt the market moving forward when there isn't an outlier.

No, that is contrary to how the console business works. ALL, repeat ALL of the profits are in software and accessories. This is directly dependent on the installed base. The number of people willing to pay a premium for a newly launched console whose initial primary value is playing existing games better is fairly limited and dwarfed by the sales goals of these companies. They might get maybe five million people willing to pay substantially over MSRP before that market is saturated. From the perspective of third party publishers that is a pathetic installed base that wouldn't receive any investment from them if it isn't undergoing rapid growth.

Thus the price point will settle back to MSRP soon enough and the console makers would be motivated to reach that point as quickly as they can. Installed base is everything when it comes to a business with software driven net revenue. Further, reduced prices grow the installed base beyond the reach of the launch price. If you can cut the price without increasing the red ink pain, you do it. This is why it would work for consoles and not video cards. Nvidia and AMD don't get a piece of the action when somebody buys the latest on Steam. Their profits are solely in the hardware itself and it must be sold at a decent margin for the companies to be sustained and prosper.

 

[epobirs]

Less idiotic way of doing it....at least for consoles...physically tie the hardware to a specific PSN/Xbox ID before purchase. Only allow that ID to login and play 6 months after purchase. Even if scalpers create new/fake PSN/Xbox accounts, it will be worth less than an actual retail unit because it means whoever they’re trying to sell it to will not be able to use their own account to play. More strict than that? Only sell to people with pre existing active accounts.

Auction based system where all the rich people like carmack get their goods and regular folk don’t even have a chance at getting one is beyond stupid.

Rather than lock the unit to the purchasing account, I'd limit the bidding to accounts that display a set minimum activity level. Tying the unit to the account just means that account is included in the sale, which would be no great inconvenience to a buyer who doesn't have a lot of time and money sunk into an existing account.

 

[epobirs]

no, auctions are sales where the highest bidder wins. in essence, prices would only go up across the board as game companies would now have a financial motivation to scale back supply in order to inflate price. want $5000 rtx GPUs? this is how you get them in less then a year. if you think the prices now are inflated wait till you give the manufacturers an auction system to game. If you are operating under the illusion that prices would come down across the board for hardware you're deluding yourself, the manufacturers could endlessly manipulate how many units are on sale to artificially keep the prices high, or atleast to prevent a price crash. there would never be another "sale" on gpus, even older generation units would sell for around "presumed" msrp forever.

The current market is designed around supply out stripping demand (slightly) so that manufacturers can make $$ on margin through volume, it's consumer friendly. change the fundamentals of the market by cutting out the distribution chain and store fronts and allow manufacturers to auction their products and the market will change from a volume sales model to a rarity model.

Imagine every new tech release being sold in a Barrett Jackson style auction, and that's what would happen to the tech industry. high end products will never be affordable again.

You might notice I mentioned that this would be more effective or even solely effective for consoles.

Jacked up prices are contrary to how the console business works. ALL, repeat ALL of the profits are in software and accessories. This is directly dependent on the installed base. The number of people willing to pay a premium for a newly launched console whose initial primary value is playing existing games better is fairly limited and dwarfed by the sales goals of these companies. They might get maybe five million people willing to pay substantially over MSRP before that market is saturated. From the perspective of third party publishers that is a pathetic installed base that wouldn't receive any investment from them if it isn't undergoing rapid growth.

Thus the price point will settle back to MSRP soon enough and the console makers would be motivated to reach that point as quickly as they can. Installed base is everything when it comes to a business with software driven net revenue. Further, reduced prices grow the installed base beyond the reach of the launch price. If you can cut the price without increasing the red ink pain, you do it. This is why it would work for consoles and not video cards. Nvidia and AMD don't get a piece of the action when somebody buys the latest on Steam. Their profits are solely in the hardware itself and it must be sold at a decent margin for the companies to be sustained and prosper.

 

[jasonf2]

Worst idea ever. On top of the fact that it incentivizes limiting production to increase margin it won't work in the long run. Once production is capable of meeting demand anyone operating in auction mode will get killed by normal sales distribution channels operating in good faith at msrp. Anyone dumb enough to pull this will have such a market backlash that they will probably go out of business. I for one would never purchase a card again from any manufacture who would work in this pricing structure We are all pissed at the scalpers, so the solution is for the manufactures to become the scalpers? If the solution is to raise prices high enough that no one wants to buy the card than the solution is worse than the problem.

 

[namad7]

Yeah, pointing out that apple sells at MSRP is literally insane, apple personal computer products are wildly overpriced.

 

[Elite666]

Yea, that's not going to work. It's a bandage on a wound that will never heal until...

Manufactures choose to meet demand!

Miners and scalpers aren't the issue. Miners present a valid demand for a product and the product manufactures are woefully late to the table to supply the demand. Fill the demand with product and the scalpers won't have anything to scalp. If you cannot fill the demand you should sell your business, get out and let someone else do it right.

It's a terrible business plan that so woefully under-estimates demand as graphic card vendors have. And this has been going on for quite some time and with previous product versions such that not learning from the past is even more unconscionable. Graphic card vendors need to get off their hind-ends and start pumping out product or get out of the way for someone else to take over. That's the only thing that will fix it.

 

[ThatStonedArrow]

This is nothing more than corporate greed. It does absolutely nothing for the consumer and does nothing to combat the inflated prices. The problem with scalpers isn't that it puts money in random people's pockets it's that the cost is astronomical. How on earth could you ever think this would help with the price issue?