Oculus Suspends Oculus Rift Dev Kit Sales In China

An anonymous reader writes with news about how Oculus is dealing with the reselling of dev kits in China. Bad news for those of you looking to get your hands on a preorder of the Oculus Rift virtual reality headset. A representative from Oculus recently confirmed that the company has had to stop selling its headsets in China as a result of an undisclosed amount of reselling. Which is to say, some of those preordering the developer edition of the virtual reality headset in China — not the consumer product, which hasn't been officially released in any capacity just yet — aren't actually looking to develop anything on the headsets. Nor are they even interested in getting a first look at the virtual reality capabilities of the $350 development kit. They're scalping, plain and simple, to take advantage of what appears to be a hefty amount of demand for the device.

Comments

Why not limit them to one per customer?

[mark-t]

Wouldn't that make trying to scalp them prohibitively inconvenient?

Re:Why not limit them to one per customer?

[Frnknstn]

Remind me, how many people are there in China?

Re:Why not limit them to one per customer?

[mark-t]

Are you suggesting that they'd get a billion different people ordering one from a single country?

Re:Why not limit them to one per customer?

[mark-t]

What does how many people there are have to with scalping? If they don't want to sell in China because there are too many people trying to order one in just that one country to both satisfy the demand there while meeting the demand anywhere else, then why don't they just say that instead of blaming it on people who are scalping dev kits?

One would assume that if scalping were a problem, limiting to one per customer would, as I said, make scalping prohibitively inconvenient... but all that you are saying is that they can't produce enough supply to meet the demand. They are two very different things, I trust that you realizes.

Re:Why not limit them to one per customer?

[mark-t]

That system doesn't scale very well when there is a limit of *ONE* per customer. That's not generally the case with event tickets, where one person may entirely reasonably be buying tickets for a themselves and anyone else that he or she specifically intends to go with so that they can all sit together. Regardless, the limit is large enough that its just practical to hire people to stand in line to buy tickets for you if you want a really large number.

Re:Why not limit them to one per customer?

[petermgreen]

If the markup per item is high enough then it may be worth paying people to buy them for you even for a single item.

Or depending on how exactly they are enforcing the one per customer limit just creating fake identities for yourself.

Re:Why not limit them to one per customer?

[bengoerz]

Limiting the supply will just push up the black market price. Oculus just gave a boon to the first-mover scalpers.

Re:Why not limit them to one per customer?

[mark-t]

As long as you know for sure that the person you are paying doesn't intend to just keep the thing that they bought for you.... which, since you paid them to scalp it for you, and scalping tends to be discourage by the law, you aren't terribly likely to succeed in any sort of legal claim for it. All you will have successfully done is subsidize their own purchase.

Re:Why not limit them to one per customer?

[mysidia]

That's not generally the case with event tickets, where one person may entirely reasonably be buying tickets for a themselves and anyone else that he or she specifically intends to go with so that they can all sit together.

This is also the case with small development shops --- usually you have more than 2 or 3 developers/testers, and you don't need just "one" occulus ---- you need at least 2 or 3 to do some serious development and testing.

Re:Why not limit them to one per customer?

[mark-t]

Actually, during the pre-release phase, they can and often will limit things to one per development shop until they have actually satisfied the other demand... only afterwards can a development shop make a request to get a second one. Also, in my experience, such development devices can differ in some significant way from the commercial product, and will thus remain property of the supplier... and the development studio has to return the device when they are no longer doing development for the product.

Re:Why not limit them to one per customer?

[mark-t]

Wouldn't limiting supply involve limiting the *total* number sold, not just the number that they are allowing per customer?

Re:Why not limit them to one per customer?

[WWJohnBrowningDo]

As long as you know for sure that the person you are paying doesn't intend to just keep the thing that they bought for you....

We're talking about something that is ordered online and shipped straight to one of the scalper's many addresses, so there's zero chance the mule could run off with it.

...and scalping tends to be discourage by the law...

Show me *one* law anywhere in the world that prohibits the scalping of non-ticket items.

Re:Why not limit them to one per customer?

[kesuki]

mark, the oculus rift2 devkit can play a few game engines, but it is not released to the public yet! it's not about shipping a full retail model in china, it is that chinese companies are requiring their employees to buy (at $350) the one per custom limit then selling them on ebay or like sites for $470 http://www.ebay.com/itm/BRAND-NEW-Oculus-Rift-DK1-Virtual-Reality-Headset-NEVER-USED-/151342637965?pt=US_Video_Glasses&hash=item233cb9638d

$120 profit at posting time. to compound the issue the devkit includes chips that have been discontinued, and are no longer available unlike a 'retail' model which will use custom chips, from a vendor like intel or amd or someone else.

Re:Why not limit them to one per customer?

[mark-t]

If it's being ordered online, why would he need to hire anyone else to buy it for him?

Re:Why not limit them to one per customer?

[retchdog]

the average hourly wage in Beijing is about US$4. you can imagine what it's like elsewhere. if the profit on scalping one of these is $120, that's roughly a week's worth of pay, probably closer to a month if you're in the boonies.

also, and maybe i'm going out on a limb here, i suspect it's not that hard to fake identification in China, at least to the point of transacting with a non-Chinese company. your solution won't work. there's just too much incentive to subvert these rules, and not enough infrastructure (or even desire) to prevent the fraud.

frankly, i don't see why they even bothered trying, if reselling was going to be a problem. maybe it's so they can say they tried? or maybe they actually wanted the publicity? i dunno.

Re:Why not limit them to one per customer?

[HappyPsycho]

If a one-per-customer is being enforced by requiring separate credit cards / e-mail / paypal addresses / street addresses you may need some external help.

Given the scalpers markup may not be that much per unit, they may need to get a certain number of units sold to validate investing both the cash and effort.

Re:Why not limit them to one per customer?

[kesuki]

correction dk1 units sel for $470 dk2 are not even on ebay yet. and dk1 weren't hd capable... they were more to just test game engines.

Re:Why not limit them to one per customer?

[HappyPsycho]

Actually, during the pre-release phase, they can and often will limit things to one per development shop until they have actually satisfied the other demand

In a pre-release phase, what other demand with there be? No consumers should be able to get it at that point. If Microsoft / Sony send a pre-release XBox / PS4 to some dev shop that is creating games for it they wouldn't be sending a single unit (how the hell would you test multiplayer?), also if the specs of the hardware change they have to send the updated hardware (where I believe the cost is covered by MS / Sony).

This isn't some large corporation which can absorb such costs, and they don't need the NDAs so you get to own the hardware and as they say at https://support.oculusvr.com/h... if you get a dev kit you are not automatically entitled to the newer versions.

Re:Why not limit them to one per customer?

[khchung]

Wouldn't that make trying to scalp them prohibitively inconvenient?

You don't know how iPhones got into China before Apple started selling them there, do you?

The scalpers, or more appropriately, dealers just stand outside Apple Stores (wherever iPhones are available) and offer to buy from people who just bought the phone in the store, for a small profit. Soon enough, people aiming for that small profit started going to the store, buy an iPhone with credit card, then immediately sell it to the dealers for cash (and repeat for every credit they own, apply for more when all cards have been used). The dealers then hire other people to carry (i.e. smuggle) the phones, a few each, across the border into China and sell it for a larger profit.

How's that for crowdsourcing, heh?

That happened for every iPhone release until Apple officially started selling in China. No more profit == no more scalpers.

Simple economics, demand greater than supply, then the price increases. If the manufacturer won't increase the price or increase production to meet the demand, then some of the lucky few who got the goods will sell to someone else willing to pay more.

Hey, isn't that's what Free Market and First Sale Doctrine are about?

Re:Why not limit them to one per customer?

[FatLittleMonkey]

the oculus rift2 devkit

Mark said nothing to suggest he's confused about it being a devkit. Just that you can limit "scalping" by not allowing multiple sales. Any individual resales beyond that is irrelevant.

I'd go further, there's no such as scalping. If someone can resell an item at higher than your retail price, you failed to price or supply your product properly. The error is yours, not the "scalper's".

[In my state, there are specific laws that protect resellers. Preventing "one per customer" restrictions precisely for that reason. Many major retailers hate that law because it prevents them from using "loss leaders" to drive smaller rivals out of business.]

but it is not released to the public yet!

If you are selling a dev version, then you are retailing a product to the public. Again, if there is more demand at a higher price than you are supplying either quantity/price, the error is the vendor's, not the "scalper's".

Re:Why not limit them to one per customer?

[FatLittleMonkey]

Re: ticket scalpers.

That "problem" was solved years/decades ago. Event ticket sales were limited to a certain number per customer

That's not a solution. That's just a pig-headed attempt to preserve the flaws of the existing system.

A solution would be to sell the tickets at the highest price people are willing to pay, at the number the vendor wants to offer. The easiest way to do that is to use auction systems. If people are paying what they are willing to pay, there's no profit margin for scalpers to resell. And if people are willing to pay more than the vendor expected, that extra profit goes to the vendor, not resellers/scalpers. If people are only willing to pay less, at least it guarantees the venue is full, which may still allow them to cover costs avoiding cancelling shows. (If demand is high enough, ie number of bids above an arbitrary price, the vendor might be able to book a larger venue. If it's low, they might be able to drop to a smaller (cheaper) venue, keeping the sense of "full house" for the atmosphere, plus increasing the intimacy of the show. Much better than a half empty venue. Such decisions could be built into the auction system to trigger automagically.) This system would also allow last-minute sales of the block of tickets held for the celebrity guest list (who often don't show.)

As I said elsewhere, there's no such thing as scalping. Only stupid vendors.

[If you are concerned about pricing certain people out of the market, you could offer a portion of the tickets on a lottery basis. Say limited to members of the local fan-club. Just as you offer "prize" tickets to radio-stations as part of your promotion.]

Re:Why not limit them to one per customer?

[Frnknstn]

Your glibly stated solution was that limiting the sales to one per customer would curtail scalping.

You did not offer any details about how personhood would be determined or how the limit would be enforced, so I was had to limit my response to a glib reply. I pointed out that one thing China has is a lot of people, and so on the face of it "one per person" may not be all that effective. You are wecome to elaborate on your plan?

Re:Why not limit them to one per customer?

[mark-t]

In a pre-release phase, what other demand with there be?

Other dev studios.

Re:Why not limit them to one per customer?

[ultranova]

As I said elsewhere, there's no such thing as scalping. Only stupid vendors.

Just like there are no muggers, only unarmed people?

Re:Why not limit them to one per customer?

[retchdog]

yeah, but in Manhattan it's about $30 (median).

The rural Chinese hourly wage is more like fifty cents, so yeah, I was right, it's about a month's income to fob off one of these dev kits.

Re:Why not limit them to one per customer?

[retchdog]

that's the minimum wage, you dolt. the Texas state average wage is $15-20.

Re:Why not limit them to one per customer?

[sg_oneill]

If you are selling a dev version, then you are retailing a product to the public. Again, if there is more demand at a higher price than you are supplying either quantity/price, the error is the vendor's, not the "scalper's".

That would be fine if Occulus was simply trying to profit maximise here, but that is not even remotely Occulus' intention here. They have a limited supply but want to keep the price low to stimulate development. If they raise the price it goes out of the hands of developers into the hands of rich folks as a space age toy, which is harmful to their business which will rely on having a strong release catalogue at launch.

Back when I used to play Eve Online , debates within the team (A rather large 5000 member alliance, back before the era of 30,000 member coalitions) would occur about whether to ban reselling of our producers to keep the price of combat craft cheap for combat pilots who tended to be poorer than the manufacturers/miners. Ultimately the wealthier producers won out (who where usually happy to have 're-listers' on the market as they could just sell batches of ships to them bulk) but it came at the cost of a lot of combat pilots simply not being able to afford the battleships which in our space had become more expensive than what our enemies where paying. And when the enemy finally came to our gates, we got steamrolled. We never made that mistake again.

Re:Why not limit them to one per customer?

[FatLittleMonkey]

but that is not even remotely Occulus' intention here. They have a limited supply but want to keep the price low to stimulate development.

Except they are not targeting devs. They are just selling a limited number of devices too cheaply. That neither targets devs nor provides development funds for themselves. There's nothing about selling-low that prevents "rich folks" buying a toy. Essentially whether a dev, a rich toy buyer or a tech collector gets a unit is a matter of first-come-first-served.

Other than shutting off an entire region (which cuts off Chinese devs as much as it does "scalpers") they are just selling alpha versions to anyone who will pay.

[Sounds like your Eve team suffered the tragedy of the commons. Your manufacturers wanted to be part of a team for their benefit, preferentially profited from that membership compared to other members, but didn't want to pay proportionally more to defend the team. This is why real world "teams" end up with governments and taxes.]

Re:Why not limit them to one per customer?

[FatLittleMonkey]

Who is stealing when scalping?

The vendors set their price, the scalper pays them the full price they ask, then merely resells for a higher price. If the vendor set the price too low, in numbers too low, the market corrects for it.

Re:Why not limit them to one per customer?

[sg_oneill]

Except they are not targeting devs. They are just selling a limited number of devices too cheaply. That neither targets devs nor provides development funds for themselves. There's nothing about selling-low that prevents "rich folks" buying a toy. Essentially whether a dev, a rich toy buyer or a tech collector gets a unit is a matter of first-come-first-served.

I dunno man. It seems pretty clear they are trying to target developers. Its in big text on the site, and much of the content provided (Such as the unity trial license and the like) would be meaningless to non devs. For everyone else , its pretty much just a tech demo at this stage.

But whilst the cheaper price wont stop the richer non-devs from buying in, at least keeping it cheap somewhat levels the playijng field allowing a wider scope of devs.

More to the point, now that Occulus is highly capitalized via its facebook deal, its quite capable of ramping up production to meet demand at its price, BUT, it seems to me occulus dont seem to want its products in wide use yet , probably to protect their reputation whilst its still in development. If they just wanted cash, they could simply produce more.

Shutting off china probably is in the scheme of things shooting themselves in the foot (China , after all is a huge market), I'm not sure how occulus can protect its target group here. It needs developers to ensure a broad range of launch products or its product will fail, but if third parties force the prices out of garage developer reach, then its all in vain.

[Sounds like your Eve team suffered the tragedy of the commons. Your manufacturers wanted to be part of a team for their benefit, preferentially profited from that membership compared to other members, but didn't want to pay proportionally more to defend the team. This is why real world "teams" end up with governments and taxes.]

Right. It did eventually become difficult to stop relisters because of the way eve works, so eventually a system dubbed "space communism" came into play where the team nationalized moons and asteroid belts and leased them out to miners for a fee, and then took a 20% tax on production. With the somewhat extensive income, the team then started supplying free ships to new players to bootstrap them to a point they could get financially independent, and ship reimbursments for the troops (ie, if you die in battle, and it wasn't stupidity induced, your ship is replaced). In the cases of the all important capitals and supercapitals the team moved to a policy of centrally managed fleet (manufacturers could only sell to the team leadership which in turn would loan them to its capital fleet). All of which led to hilarious drama when one of the directors decided to one day run off with the titan and the entire capital fleet reserve. Its a pretty goddamn interesting game if your interested in a simulation of an idealized wartime economy.

Re:Why not limit them to one per customer?

[kesuki]

"More to the point, now that Occulus is highly capitalized via its facebook deal, its quite capable of ramping up production to meet demand at its price, BUT, it seems to me occulus dont seem to want its products in wide use yet , probably to protect their reputation whilst its still in development. If they just wanted cash, they could simply produce more."

this is exactly my point. if they wanted to they would take a page from sony http://store.sony.com/wearable-hdtv-2d-3d-virtual-7.1-surround-sound-zid27-HMZT3W/cat-27-catid-3D-Personal-Viewer and sell a vitual 750" screen as seen at 65' away. but they want real games that look nice and are meant for gaming. and sony is going to release a version that can be motion compensated for, as it's tv model is designed to be sit down and do your best to not move, because if you move the image doesn't change and sensitive folks get vertigo. whereas the gaming model is to track and move the image as smoothly as possible with as few vertigo as possible.

the occulus rift is a devkit, people have been asking for 3-d headset displays since digital tech made it possible. those people are not ready to own a rift yet, because it has one major game engine, and decent games take time to mature. i bought planetary annihilation when it was early in development and it was awesome but it is so much harder than a normal rts and the interface is so different that i stopped playing it, i might have enjoyed it better had they had weaker ais or no nukes allowed modes, which maybe it has by now, but playing it from beta was not a plesant experience. saying that the occulus rift should 'let the market decide the price' when games are all crappy and in early alpha development would be almost suicide. i bought the original playstation 1 just for final fantasy and the few rpgs they had all got me mad at buying a ps, cause i had no games i liked. sony almost died to me, but eventually good games came along and made it worth the money. so there is a litlle chicken and egg dillema because in order for people to 'eat the chicken' at a bbq no one can eat the mutant egg of the chicken for breakfast. if you do what philips did with the CDI (computer disc interactive) and release the system to everyone without securing launch titles it will fail. if you launch a system like sony, but promise on paper lots of games, maybe it will work for some, but others will be pissed at the lack of quality of the games that were rushed to fill the void. however what the rift is trying to do is they somehow knew the first chicken would come from that egg, and decided to hatch feed and grow it until it could lay eggs for chickens and once that was successful then they had bbq, and some people could still eat the eggs, of the other chickens.

i think that for as long as i have waited for VR in the home that the occulus and the ps4 both getting head tracking VR is very cool, and i will use whichever one works better. so if occulus or sony delays their head tracking vr units i might even get impatient and get the one that is released, rather than wait on reviews. but only if that model can do 3-d bluray movies (i have 3 3d bluray capable computers if you count my ps3) either with a standard pc or with a ps4. if it doesn't do movies it is dead to me, and games are less important. support for google earth streetview would be very, very interesting.

Time for #cardboard

[kyoko21]

Time for #cardboard to get resold.

Good for Google

[countach]

All the more market share that will go to Google Cardboard instead!

Good strategy

[cloud.pt]

Not selling it directly if price is being uncontrollably inflated is great strategy if they want to keep this product popular, especially in China. It was pretty obvious Chinese public would scourge the earth for these in order to start reverse engineering it in a country with poor IP legislation (especially for foreign IP), but the real problem Oculus would face with this Rift "black market" is marketing itself, as the product would immediately get the exclusive, overpriced label that a developing countries loves to hate. And the Asian market is no small piece of the pie for the paying gaming industry.

Re: Good strategy

[Anonymous Coward]

China has good IP laws. If you create a product you *will* have to improve it and find ways to make it cheaper. If you don't, somebody else will just as soon as they can figure out how to. Contrast that with some other country's IP laws where you can lock down knowledge and bribe the government into enforcing artificial constraints in the marketplace.

There are people that think 75+ year copyright s and 20+ year patents are a good thing. I say let product evolution run unfettered.

Re: Good strategy

[phmadore]

WELL SAID.

Re:Good strategy

[cloud.pt]

Dude, it's a subsidiary, it's not that big of a deal. I bet you use a lot of hardware and software made by worse companies, which unlike Facebook have a track record of abusing your privacy for your own prejudice. Google, Apple and Microsoft are just some examples. Do you consider the hardware worse because it was made by such companies? Or are you saying that the fact a social media company, like Facebook, controlling a gaming company might have worse consequences than:
- a search company creating a mobile OS, phones, and enforcing guidelines to phone developers (Google);
- a "designer" company limiting your (as described by themselves) high-margin smartphone from being smart because carriers can't handle the bandwidth (Apple);
- an OS company which instills last century software patterns while playing catch with the previous 2 in new platforms for hardware, software and the cloud?

I'll give you 2 examples of weird success stories on companies one would least expect it:
- Blizzard making an MMO out of an RTS
- Amazon making an e-reader out having an online bookstore

Re: Good strategy

[cloud.pt]

I agree with everything you said except the first sentence. China does not have good IP laws because there is no balance. Some countries have restrictive IP laws like the US, and some have liberal IP laws like China and India. I don't know if there is any particular country with the perfect balance of protecting the interests of the inventor while not encumbering social development. To me that is perfect balance. Big Pharma is a known abuser of that decades long exclusivity which makes people die of tuberculosis

Why do Americans hate capitalism ?

[Anonymous Coward]

Or is it the Chinese are better at it than you?

Re:Who cares, it's just bits

[Stormwatch]

No, you moron, it is hardware.

Re:So the Chinese have created a free market econo

[cloud.pt]

Why bring politics to a much more complex topic. This is not about liberalization of this good. It's not a good yet, it hasn't been released. It's not even an essential good. They are issuing developer editions for genuinely interested developers who will make the device popular with new content.

If you get a free market for these controlled sales, you will end up with gaming enthusiasts or knock-off reverse-engineers rather than real contributors getting the item, and companies know better than to buy an overpriced SDK: product won't sell if developers don't get easy access.

And from what I know, America is far from being "a bastion of free enterprise" mate: they sell iPhones through selected carriers, they won't allow companies to sell cars directly to consumers (Tesla), and they are one of the most import-afraid economies around - there's no other country where "Made in this country" is such a strong compelling argument. They don't like free markets, they like controlled markets, for whatever good or bad that may bring

Re:On Reddit 3 Days Ago...

[Anonymous Coward]

In terms of anonymous communities, Reddit is at least somewhat more respectable than say... 4chan and Encyclopedia Dramataica. But you have sites Something Awful and Fark that are in the same line of thinking, but somewhat more moderated. Reddit has more in common with slashdot as both do AMA (Ask Me Anything) type of things, and slashdot has been doing it far longer than Reddit has.

Where Reddit falls down is similar to how Slashdot falls down. I'm not compelled to register (or login, IIRC I have a 6 digit slashdot id predating Google's rise out of obscurity, one of these days I'll remember the password,) Trolls have to be meta-moderated down, but the trolls often come in the shape of zealots just as much as they do plain old asshats.

Microsoft used to be public enemy number one on slashdot, then Apple started overthrowing areas that Microsoft wasn't putting much effort into. So now the "nerd ecosystem" is divided something like 35% Microsoft, 35% Apple, 20% Google, and 10% Linux/BSD/GNU/OSS squabbling. Mention Android is horrible here, and you get jumped all over cause "It's Linux" only it's not the form of Linux people want. Mention Android outside of Linux forums and everyone will rightly state how horrible it is, along with things like OpenStack. Mention Advertising (eg iAds, Google DoubleClick, MSN ads, etc) and everyone damn near has a meltdown how it betrays the RMS/GNU/Open-source philosophy even though it allows things to be free to read/watch/use.

But as far as the title of this story goes, there are lots of people who have connections, and it will make them a quick buck, they will do it. Hence ads on your free-but-easy-to-find-elsewhere content, and Apple selling the same hardware you can get 30% less if you build it yourself, or 10% less if you avoid the Microsoft Tax.

Re:Who cares, it's just bits

[ArcadeMan]

I think what AC is saying is that we're all stuck in The Matrix.

Re:How Long for the Identical Copies?

[Mister Liberty]

Identical? No.
90 degrees tilted -- yes, I'd believe that.

Re: On Reddit 3 Days Ago...

[Type44Q]

vomit up... even my own feces

I imagine you'd want to hold that down, if you went to the trouble of ingesting it in the first place.

What's wrong with reselling?

[diamondmagic]

There's nothing wrong with "scalping, plain and simple." It's just a secondary market for goods - the very kind we like when we talk about books or music. You have a right to resell things.

If there's a very active secondary market for something, that suggests people are having a hard time getting it from the primary source, or there's just not enough to go around to everyone who wants one, so a higher market price forms. It encourages people who have one to sell it for the new, higher price (increasing supply); and it ensures that those who most urgently want one can get one if they so choose.

Re:What's wrong with reselling?

[phmadore]

And furthermore, strategy wise, it provides the opportunity for the manufacturer to actually find out what the product is worth. But I guess you're more likely to do that if you're not funded by Silicon Valley VCs.

Re:What's wrong with reselling?

[gman003]

The problem is that this is not a consumer product - it's a development kit. It isn't ready for consumers yet, and is intended only for use by developers so they can have something ready when the retail version is available.

Reselling to non-developers might give Oculus a bad rep because they're being judged by an incomplete product that wasn't supposed to be used by such people. So I can see why Oculus is trying to avoid this happening.

Re:What's wrong with reselling?

[ThePeices]

Its because these are developer kits, not the final consumer product. There is only a limited number of devkits, and these kits are for developers, not end users.

The Chinese can resell as many consumer Rifts as they wish, there will be no limit. Dev kits are another matter entirely

Re:What's wrong with reselling?

[diamondmagic]

Except now nobody in China is buying one. How is that better? That sounds worse!

If there's a limited quantity, there's a limited quantity, it doesn't matter who buys or resells, the same number of people are getting one. The higher price simply ensures those who want it the most get one: you don't "wait" for a scalped unit, the whole purpose of reselling so that people who want one now can get one now guaranteed, without risking losing out or waiting.

Re:What's wrong with reselling?

[diamondmagic]

If Oculus wanted to collect that revenue, they'd have raised the prices on day one. Most markets work perfectly fine without auctions...

That's not to say that reselling adds "no value." It ensures that someone willing to pay the higher price gets one, whereas they might not get one at all otherwise. That certainly adds value! Profit, by definition, means taking scarce, valuable, resources; and selling it as something more valuable.

Re:What's wrong with reselling?

[Dutch Gun]

Yes they're developer kits, and nearly everything in the world is limited in supply, how does this change the situation? Secondary markets like this expand access to the product to those who want it, not limit it. It encourages people who have one to sell it, and it makes it possible for those who need one now to get it now.

The market for dev kits can't expand in time to meet consumer demand, nor would it be cost-effective to try to do so. It takes a lot of capital to ramp up to full consumer production capacities. And, any dev kit taken out of the hands of actual developers will tend to limit eventual dev support at launch time. It's crucial to get those devices into the hands of actual developers in order to ensure there is actual support for the product at launch time. There's no need to expand access to this particular product, because it's not a consumer product.

Re:What's wrong with reselling?

[diamondmagic]

The market for dev kits can't expand in time to meet consumer demand, nor would it be cost-effective to try to do so. It takes a lot of capital to ramp up to full consumer production capacities. And, any dev kit taken out of the hands of actual developers will tend to limit eventual dev support at launch time. It's crucial to get those devices into the hands of actual developers in order to ensure there is actual support for the product at launch time. There's no need to expand access to this particular product, because it's not a consumer product.

All these are reasons to continue selling the product, at a higher price, and to resellers (if they'll still buy).

Higher market prices expand access to a product... period. That's called the law of supply.

The amount of capital consumer production would take is irrelevant. They're selling one product, it's designed for developers, and at the manufacturer price, there's a shortage.

If the kit is being resold, it's still getting into the hands of someone who wants one, and it ensures that they have guaranteed access to one, which is something Occulus isn't doing! (And if discriminating between developers vs. others is a stated goal, they've already completely failed at it. However, who else but a developer would pay the higher price for hardware that's supported by no games?)

So do you want to ensure that developers can get their hands on this, but you don't want to expand access? That's mutually contradictory.

Re:What's wrong with reselling?

[RoadDoggFL]

Most markets, but some (like event tickets and new gadgets where demand at retail cost exceeds supply) don't. And without an auction, there's no way to either avoid scalpers with the initial run until demand is met, or screw over early adopters when you decrease the price to reasonable levels. An auction would inflate the first run to what the desperate are willing to pay, and prices would quickly normalize as supply improved.

Your reasoning for the value of scalpers is ridiculous, too. The price wouldn't be as high if it weren't for them in the first place. Maybe Consumer A, who ended up with the product, wouldn't have otherwise, but Consumer B, who missed out because of the scalper, doesn't benefit from this scenario. Also, the second Consumer B would have spent less on the product than Consumer A, meaning it's entirely likely he'd be more willing to spend additional money on future products and services while Consumer A mentally adds the scalper's profits to his support.

The value you're claiming is an illusion.

Re:What's wrong with reselling?

[diamondmagic]

The price wouldn't be as high if it weren't for them in the first place.

That's a good thing though. A higher price encourages people who have one to sell it, ensuring that they don't just sit around idle.

If a low price were an end unto itself, why not just hand them out for free?

Re:What's wrong with reselling?

[RoadDoggFL]

But that still leaves the problem of lost revenue for the producers/artists/entrepreneurs/manufacturers. It's a bad thing, because customers feel they've contributed their purchase towards supporting a product when they've actually contributed $0. A product that was bought high at auction by an eager customer can still look to recoup some of his costs even if the price is down, but a lower price means more potential buyers can seek it out.

A low price isn't an end unto itself, but offering the lowest price that can be incrementally raised (which in this case will be higher than MSRP, I might point out, it doesn't seem like you got that with your reply), giving the consumers willing to pay top dollar for it some more spending cash to further support the product (or anything else). And mind you, all of this money would be going back to the people responsible for the product in the first place, and not a leech providing zero value.

Re:What's wrong with reselling?

[diamondmagic]

If the manufacturer loses revenue for mispricing their product, that's their problem, not the developer's, or anyone else's.

The warm fuzzy feeling of sending your money to the manufacturer instead of someone who helped you get the product in your hands in the first place is worth exactly $0.00.

Re:What's wrong with reselling?

[RoadDoggFL]

I know it's their problem... and an auction system would solve it completely. It's not even a matter of mispricing, it's a matter of the market value of the product fluctuating at various stages of the product's life and availability levels.

Also, the warm fuzzy feeling of sending your money to the manufacturer instead of someone who charged you a fee for a meaningless "service" is worth something, as it contributes to the profitability and health of the company, making future versions better. Applying it directly to Oculus, had they auctioned off the initial run, that extra revenue could've gone a long way towards keeping them independent, or let them avoid seeking further capital (at the expense of relinquishing their majority stake in the company) if they were so inclined. The more money an independent Oculus has, the more they can pour into R&D for future version and current manufacturing. The enthusiasts who backed the Kickstarter are exactly the sorts of people who are interested in seeing better future versions. This scenario obviously doesn't apply after the facebook acquisition, but who's to say it still would've happened if they weren't strapped for cash?

Re:What's wrong with reselling?

[Dutch Gun]

You're conflating the issue, because there are two different products and two different markets (game developer kits are typically NOT the exact same hardware as the final product). It makes no sense to expand the developer supply (at potentially enormous cost) to meet the consumer demand. The issue is that developer kits are being taken out of the developer market and being sold to consumers, where it does the company absolutely no good at all.

Developer kits are produced in limited supply at greater costs because the final hardware is likely not ready for manufacturing yet, or else large-scale manufacturing facilities are still being set up. Don't forget that the laws of supply and demand don't exist in some abstract form, especially for manufactured goods. You seem to be ignoring the realities involved in the massive initial infrastructure costs in setting up physical assembly lines, and the inevitable ramp-up time that involves.

I'm not sure how to explain this any more clearly.

Re:Who cares, it's just bits

[Stormwatch]

Whoa.

Re:Who cares, it's just bits

[fustakrakich]

So what? It was sold. You only get to collect once, not every time it changes hands.

What's the big deal, Occulus?

[phmadore]

I realize they have the right to stop selling anything to anyone at any time for any reason, but I'm struggling to figure out what their beef with this is. They should simple alter the dev kit product so that it is virtually impossible to not spot the difference between it and the actual product. This way the resellers will be prevented from claiming the device is the genuine article. Otherwise, what's the problem? Someone else making money off your product? Did Steve Jobs come out of the grave and buy this company? Am I being an asshole or is this just more anti-Chinese xenophobic garbage in the US media and amongst decision makers here? So what if I decide I want to do that, from Colorado? What are you going to do, sue me? I buy it, it's my property. It doesn't quite matter why I buy it, or for what purpose I buy it. Then I have the right to sell it. For whatever price I value it at that you are willing to pay. Is this not the way capitalism is supposed to work? I'm not going to pretend it does work, I'm just asking, did I get that part right?

Re:What's the big deal, Occulus?

[ThePeices]

Its because there are a limited number of devkits being made and there is a limited number of kits being made per day.

The dev kits are for developers, not end users. The manufacturing is not scaled up for mass dev kit production, for very obvious reasons. The consumer version will have no such limits.

Re:What's the big deal, Occulus?

[bentcd]

I realize they have the right to stop selling anything to anyone at any time for any reason, but I'm struggling to figure out what their beef with this is.

The value of the Oculus brand is greater the more developers they can snag to work on/with their product, and so the more developers that get their hands on the devkit the better for Oculus. They are limited in how many devkits they can build however and so it is important to Oculus that every single one that they make goes to an actual developer, because that developer increases the brand value. Every devkit that goes to a non-developer is a net loss to Oculus because that is a devkit that did not go to a developer.

This would be different if they were not production constrained but I expect that they are.

Re:What's the big deal, Occulus?

[FatLittleMonkey]

The value of the Oculus brand is greater the more developers they can snag to work on/with their product, and so the more developers that get their hands on the devkit the better for Oculus.

That isn't consistent with them selling the units. The moment you charge money you are just selling them. If you are selling them, you can't argue you're trying to target devs. (And if the units are worth more second hand than new, you are clearly charging too little.)

They are limited in how many devkits they can build however and so it is important to Oculus that every single one that they make goes to an actual developer

Then they shouldn't be selling them to anyone who orders one. They should be lending units to their preferred developers on an invitation-only basis. They can then put any conditions they want in the loan agreement (such as a large penalty for any unit not returned, to prevent (or at least discourage) them being sold.)

Since being purchased by Facebook, they have much less need for new cash to fund their ongoing development, so that isn't an excuse. When they were independent, cash was an issue, in which case selling "dev" units for less than market demand price is just robbing themselves of money they could use to pay for the second batch or second version.

Re:What's the big deal, Occulus?

[bentcd]

That isn't consistent with them selling the units. The moment you charge money you are just selling them. If you are selling them, you can't argue you're trying to target devs.

But of course you can, if that is in fact what you are doing.

Then they shouldn't be selling them to anyone who orders one.

And apparently they are not anymore: they're no longer selling to China because they've learned they don't tend to end up with developers over there.

The devkits are theirs to sell to whoever they wish, and if they don't want to sell to China then that's their business.

Re:What's the big deal, Occulus?

[dkman]

I too was wondering how this is any different than the big console launches lately. It seemed like half of the xboxes leaving Best Buy were being listed on Ebay. All these a-holes are doing is creating false demand and a shortage for people who actually want one. If someone is willing to pay more to get it from the a-hole rather than waiting for the store to get more then so be it. Honestly, I don't see a good way to only sell it to the people who actually want the product.

I think the main reason that this got attention is because this was in "China". But it's also because the company did something about it by saying "fine. we won't sell any more if they're just going to end up on chinese ebay." The better solution is to produce more so those who want them can get them through official channels, but that's up to them.

That's how China works

[Dr.Saeuerlich]

Nothing new, this is just the modus operandi here in China. Anything, iPad, iPhones, tickets for concerts, movies, anything that has limited availability and a chance for slightly higher than usual demand gets scalped - even if it means ordering lots of stuff from overseas or smuggling things, like iPhones, from Hong Kong.

The Occulus folks are just doing the same that Apple is doing - finding a way to ensure that the product falls into the hands of people who will actually use it. In HK it took them a couple of measures to ensure that HK residents get hands on the iPhone first, over scalpers coming for a day trip from the mainland.

Re:On Reddit 3 Days Ago...

[phmadore]

I mean all of this was said by an Anonymous Coward, so take it with a bag of dogecoins and relax.

Re:Fuck China

[phmadore]

WTF? Are you retarded or just plain stupid?

Re: On Reddit 3 Days Ago...

[retchdog]

fecal vomiting is a thing. it's often a symptom of a serious problem, as is vomiting blood.

Re:So the Chinese have created a free market econo

[antifoidulus]

You are ignoring things like asymmetric risk. If I buy a kit and cannot sell it for more than I paid for it, I can return it*. If Oculus Rift builds more dev kits than people are willing to buy, they can't just go back to the component manufacturers and say, "I bought too many of these, please give me back my money". So no, it's not "capitalism", if it were pure capitalism then we wouldn't have any consumer protection laws and they couldn't return any un-used merchandise(which would probably put the kibosh on these kinds of shenanigans but at a cost that isn't worth it).

I'm assuming there is a return policy, laws in most countries would probably support the consumer if they tried to return an unopened product in a reasonable time window.

Re:Who cares, it's just bits

[HappyPsycho]

Simple reason its a problem, they only have a certain number of of the units (these are dev kits not consumer units). These units are probably not being sold with a high profit margin.

They want these units to get to people who will either provide apps for it (e.g. https://www.youtube.com/watch?... ) or developer level feedback for bugs / improvements. When you are trying to get developers onboard with your platform and having scalpers doesn't help as it only increases the cost to develop for your platform.

Oculus isn't unique with this problem, I remember not getting a raspberry pi from the first batch yet finding it at 3-4 times the price on eBay (I had to wait a couple months for the next batch). Sadly, the same thing is going on with the beaglebone black atm.

Re:So the Chinese have created a free market econo

[petermgreen]

laws in most countries would probably support the consumer if they tried to return an unopened product in a reasonable time window.

At least here in the UK there is a lot of protection for consumers but far less protection for people buying stuff for buisness reasons. The tricky bit of course is distinguishing real consumers from failed scalpers fraudulantly claiming to be consumers.

no idea if the same applies in other countries.

Scalping? China? Say it ain't so!

[Rick in China]

The only thing about this article that shocks me is the fact that the sellers were naive or ignorant of the fact that this is obviously going to happen, as it has with every device available in any market. There are many Chinese (especially students) who live abroad and have 'side-businesses' where they open up taobao stores and sell 'import goods' which are local purchases for them, they'll get you whatever you want from domestic western/1st world markets and mail them to you in China..

Reverse engineering

[KraxxxZ01]

Wont be surprised to see Uculus Roft selling before Oculus Rift.

Re: Who cares, it's just bits

[theCzechGuy]

You're not listening. These are dev kits, they are not sold for profit, they are sold to create developer ecosystem. Production and distribution costs something, you understand that, right? Because of economies of scale, units produced and sold in small numbers may actually cost more that the final product if they don't make any profit at all. Besides if profit was the only thing Oculus cares about then why would they care who buys the devices? Riddle me that.

What's the big deal, Occulus?

[AHuxley]

Its hard to work out what the issue is.
China will see the product in the same way it saw 4k displays at 30 and 60 Hz. A flood of new VR products at a working class price point to meet market demands will be in shops globally.
Some will have Windows, Mac and Linux support, others will be more driver and OS bound.
So in time you will be able to find some great made in China VR products at various price points with interesting hardware support for your VR needs via brands from China.
No need of think about the past, just think of the VR fun, dev support and product selection from China.
China will do what most nations do, route around any issues and get back to sales of their own products.
Compatible headsets for all, just not from one brand at the expected price point :)

Re:Who cares, it's just bits

[gl4ss]

no they're selling them to anyone with cash and 90% of people in the kickstarter weren't devs and neither are people getting it now...

if there's room for scalpers to operate, then raise the price in china. simple, huh? and bbb - the pricing is stupid for the demand. if they asked for more they could run a bigger batch faster....

Re:So the Chinese have created a free market econo

[Molt]

If they're taking money for it and selling it openly to the public then it's been released, it doesn't matter that the technology is labelled as being 'for development'. Were they to restricting sale to people who qualified as a developer in some way then maybe, but as it is most of these are finding their way into the hands of people who use them to play HL2, another couple of games, and then take up some space in the wardrobe.

Dev companies won't care too much, they'll take the $120 hit on a device if it's something they're going to make a lot more from. Getting the paperwork sorted to buy them may be more hassle, but most will do it.

What's wrong with reselling?

[RoadDoggFL]

What's wrong with reselling is that it leaves revenue on the table for artists/entrepreneurs, instead giving it to those who add zero value. With a high demand product, a consumer-friendly price is taken advantage of by scalpers and consumers end up getting screwed, because the money they pay above retail doesn't support the product. I really wish products like this in high demand (also game consoles and general admission tickets) could be auctioned until they shipped (or the day before the show) so the actual value of of the product is collected by those who produce it and will support future investment into it. Oculus could have a leader board of sorts, showing the price needed to get in on the next shipment, and once you're auctioning to determine the value of a product, you're already determining the market value and significantly increasing the risk for scalpers to not recoup their expenses.

Re:Who cares, it's just bits

[Half-pint HAL]

and bbb - the pricing is stupid for the demand. if they asked for more they could run a bigger batch faster....

They don't want to run a bigger batch, because it's not finished yet. If they had wanted to, they could have ramped up production months ago, satiated market demand then retired. But they would have been a flash in the pan. They're trying to build a long-term business, and while I'm not convinced they're going to solve the latency problems entirely, I at least respect their integrity for not rushing an unfinished product out the door.

Re: On Reddit 3 Days Ago...

[retchdog]

no, I was unfamiliar with that. it's actually a weird AD&D (1st edition) reference; long story.

Cartman did it too...

[NeverVotedBush]

Cartman figured it out in South Park as well... It became a fad as I recall...

Re:China?

[NeverVotedBush]

And Russia. And the Ukraine.

Re:Lock the hardware to the developer

[Ash-Fox]

Instead they choose to lock out an entire market.

I think more companies should do this.

Oculus is dumb

[Bensam123]

Yup... you know why? Because the Rift is practically a finished product. Now it's just coming down to who gets the product first. It could've been released with the first dev kit on a normal release cycle, but instead they've been holding it over people for half a decade. Sure it would've been buggy, but it's definitely getting fixed and being improved on. Now they're on gen like five and have pretty much a finished product and they're still releasing it as a dev kit.

There is a point at which you're actually hurting yourself and those that want to use your product by not releasing it in a timely manner or releasing it in very limited quantities. The very fact that there is a giant resale market indicates people want this as a product so badly they'll throw absurd amounts of money at it. I already thought about purchasing a dev kit just to resell it because I know there is demand for it.

For all the brains Oculus has and all the doctorates their employees possess, they still act completely retarded when it comes to supply and demand. It doesn't matter if the product isn't 100%, it doesn't need to be and what is 100% anyway?

There's lots wrong with it

[rsilvergun]

Just ask Bandai. Scalpers bought up all the Action Figures for their Gundam Seed TV show in America. At one point a figure with an msrp of $15 was going for $150 on ebay and at the big action figure scalper sites.

Thing is, Gundam is a giant robot show, and the toys are a major part of what draws fandom in and gets buzz. Nobody could get the toys without paying 5x-10x msrp. Heck, I didn't even know Bandai had put the show out until I saw some of the toys at the old KB Toy Store for $3 a piece after it had finished bombing and Bandai dumped the remaining stock.

Oh, and if you're in a band and your show gets scalped you might sell 10000 tickets and only 1000 people show up. Thing is, you were planning to sell the other 9,000 ppl who showed up CDs and T-Shirts.

So yeah, scalping hurts. Lots. It's a much more complicated issue than "Just a secondary Market"

Ya right!

[Bust0ut]

There is no way sales in China are "ALREADY EXPLODING!".