Bot Bombardment on Graphics Cards
Over the past year or so, hardware manufacturers like AMD and NVidia saw a huge spike in bots purchasing their products and reselling them on sites like eBay, StockX, and Amazon. Companies are selling their equipment for an MSRP of $400-600 and greedy consumers are reselling them at 180-220% the price, making them a ridiculous amount of profit. This has been seen before with sneaker manufacturers, like Jordan and Nike, however this was unexpected for graphics cards, resulting in many companies not able to regulate who was purchasing their products.
There is something unique to see about the market for graphics cards and how it has changed over time. If we assume that originally, the market was largely consumers who used their product truthfully; gamers, crypto-miners, live-streamers, video producers, etc. And that once the most recent series of graphics cards was release, the market overflowed with bots and resellers looking to make profits. Corresponding to our ideas on Network Effects, we see individuals paying higher and higher prices for these graphics cards for one of two reasons. The first is that the Nash Equilibrium fraction has become larger (users assume that there will be a larger fraction of the market purchasing the item) which can result in upward pressure and influencing users to pay these prices. The other is that now that these prices are so high, only those who value the graphics cards so high will be willing to purchase.
Companies with these products also play effect on these markets. They need to assess the shortage of supply, the new increased popularity, the MSRP for their product, the feelings of their true consumer, and their own profits. Obviously, consumers will be furious if they are bombarded with bots and cannot purchase the product for a fair price and this can have long-lasting effects with their relationship to the company, potentially decreasing profits. However, from a profit perspective, these companies are still making money whether its consumers or bots. As long as there is some small fraction willing to pay either MSRP or the reselling price, the companies profit from these resellers.
Articles:
https://sixfiguresneakerhead.com/tips/reselling/graphics-cards-2021/
https://kotaku.com/its-not-that-hard-keeping-big-resellers-away-from-graph-1847126477
https://www.pcgamer.com/resellers-have-made-millions-off-new-gpus-but-the-profits-are-trending-downwards/