What just happened? As the third-party market for new consoles and PC hardware continues to thrive, some are starting to wonder if traditional sales channels should be done away with. In a recent post on Twitter, id Software co-founder John Carmack said it seems like we would be better off with a “transparent auction system directly from the manufacturers and a more efficient market.”
“There would be much indignation at reported prices out of the gate, but removing intermediaries should net out better for consumers in the end,” Carmack added.
Given shortages and speculators on things like 3090 GPUs and new consoles, it seems like we really would be better off with a transparent auction system directly from the manufacturers and a more efficient market. The world of sales channels prevented that in the past, but we \— John Carmack (@ID_AA_Carmack) February 19, 2021
There’s a lot to digest here, so let’s take it a bite at a time. For those who haven’t been keeping up with the gaming and hardware markets as of late, both are facing multi-faceted retail issues stemming in part from:
- Chip shortages due to the pandemic
- Retailers limiting sales to the Internet due to the pandemic
- Scalpers using bots to buy up all the online inventory and reselling for huge profits
- A thriving crypto market that is attracting amateur miners
Carmack isn’t wrong to think out loud about how to remedy issues currently impacting consoles and PC hardware, but the solution he presented has many flaws.
Selling directly to consumers via auction would effectively eliminate scalpers, but that doesn’t solve anything from the buyer’s standpoint. Inventory would still be in short supply and prices would still be well above retail. The only difference is that hardware makers would be netting the extra profits instead of individual scalpers.
That opens a whole new can of worms. Suddenly, Nvidia and AMD would be receiving all the criticism and negative press for high prices, not scalpers. You’d also have to worry about the risk of artificial inventory shortages. What’s more, it’d require a complete restructuring of the sales process.
Manufacturers have one task: to make products. Selling goods directly to customers isn’t part of their job description, and with no experience, they probably wouldn’t be very good at it. It reminds me of a line from comedian Mitch Hedberg: “It’s not fair, you know? It’s as though if I was a cook, and I worked my ass off to become a really good cook, and they said “alright you’re a cook… can you farm?”