Many people analyzing the GPU market are overlooking some important facts about economics.
By focusing on crypto mining, tech enthusiasts are overlooking something critical: lower demand for the crypto mining hardware isn't a big deal. For those who prefer to buy used, their prices naturally drop as miners flood that sub-market with cards. That much is obvious. However, counting it as the main driver behind new prices falling is unreasonable. The demand from other people is still quite high, so there's no real reason to reduce prices there in response to that demand. That's not what's happening. Crypto is only a buzzword, as brands continue to shift the blame onto crypto miners - even though the majority of them are only individuals looking for a little extra money. So, what's actually happening? Being conveniently ignored is the fact that production and GPU shipments reached a high right as prices started to fall. As markets stabilized when tariffs and trade embargoes in response to COVID fell apart, GPU shipments essentially spiked. Manufacturers ramped up production to catch up and flooded the market themselves. They also introduced new products that widened the range of components that are available. Literally more GPU's of various tiers are available. This caused production cuts to bring down the amount of units hitting the market so that it can stabilize. To prevent as many issues as possible and have a better guarantee of longevity, most buyers would still rather purchase new. This is actually what's happening here. To stabilize the market faster, scalpers were dealt critical blows after price gouging. Buying limits were imposed, so a huge chunk of the reseller market was simply dissolved. That makes it significantly more difficult for shops to justify high prices due to shortages. So, the new products being released are much less negatively impacted by scalpers intentionally shorting supply by purchasing as much as they can, holding them until buyers become desperate, then finally selling their stock for hugely inflated prices. To cut their losses, they drop their prices to near MSRP, which benefits them less than it benefits shops. To shut scalpers out of the market, shops hold sales and further reduce prices below MSRP to make it up in sales volume. MSRP is only the suggested retail price, which includes profit margins. When using this method, a shop willfully narrows its profit margin per unit in exchange for an overall larger long-term profit through a greater number of units sold. You can still see some incredibly stubborn scalpers hawking GPU's for prices that are several times the suggested retail price. Those parts don't sell, so they have to bring them down. These are the people who missed the prime scalping window trying to snag a sucker who didn't do his / her research, and using the sunk cost fallacy. They bought late to sell high, and they refuse to cooperate so they can cut their losses. Only this usually doesn't work because the financial damage has already been done. With more new GPU's available for sale, their stock is less valuable. We held these discussions and personally informed buyers since January 2020 that this is the solution. We were right. The very thing that everyone told our team wouldn't work is exactly what's working. Just saturate the market with variety, increase production and shipments, and crackdown on scalpers. Don't keep falling for the scam. The answer was obvious, they're carrying it out right now, and the responsible parties are denying all accountability for this mess. You're welcome. Thanks for reading. Until next time! |
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