Ebay Versus Google And Microsoft Information Technology Essay

Read the attached case study and answer the following questions. An excellent answer will in all cases demonstrate an understanding of the basic theory which underpins the analysis of organisations and their Information Systems. It will demonstrate an understanding of the different system and be able

to relate this in a practical way to provide information on which management decisions can be based. It will use the

case study example to illustrate the answer but will also show extensive evidence of additional research and reading.

An adequate answer will demonstrate the application of the underpinning theory and a more limited ability to apply this

to Information Systems problems. It will relate this to the case study example and show evidence of additional research

and reading.

A failing answer will fail to apply any theory to the problems stated and, for example, consist purely of comprehension

of the case study material.

Q1. Do you agree with Google and Microsoft that eBay is now vulnerable to their assaults via Google Base and

Windows Live Expo? Why or why not?

[30%]

Q2 What are the major advantages and limitations of Google Base and Windows Live Expo? Which do you prefer or

would you use both? Why? Go to their Internet websites and read reviews at other sites to help you answer.

[40%]

Q3. Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions as noted in this

case enough to ward off the competitive assaults of Google and Microsoft? Defend your position.

[30%]

THE FINAL DATE FOR SUBMITTING THIS ASSIGNMENT VIA KLE (WEBCT) IS

3:00 PM on Thursday 9 December 2010

eBay versus Google and Microsoft:

The Competitive Battle for e-

Commerce Supremacy

or most of its existence, eBay has enjoyed a virtual

monopoly. It now commands more than 90 percent of

the online auction market, and from 1999 to 2004, it

posted at least 40 percent annual profit growth every year,

even as brawny competitors like Amazon and Yahoo were

taking runs at its core business. Yet for all its phenomenal

success, in 2006 eBay began to face the toughest challenges

of its 10-year history. The armies massing on its borders hail

from Google and Microsoft, but rather than aim for eBay’s

auction business, the two behemoths want to use their

strength in search and advertising to build dominance in

online classifieds-the format that many analysts think will

define the future of e-commerce.

“Ebay auctions are still too hard for many consumers

to navigate,” says Safa Rashtchy, senior analyst covering

e-commerce and search at Piper Jaffray. “Overall, people

prefer to buy locally, but there hasn’t been an efficient way

for them to find each other.”

Fans of the populist Web site Craigslist, in which eBay

owns a 25 percent stake, might disagree. With dedicated

sites in many cities across the world, Craigslist is an online

classifieds meeting place for millions of people looking to

share ideas, meet a friend, find a job, or locate an apartment.

Meg Whitman, CEO of eBay notes, “Craigslist is an

excellent example of how the Internet brings people together

to trade goods, help neighbours, or speak out on

important issues. Craigslist has become the online

gathering place for local communities.” But Craigslist

doesn’t have an online payment system-it doesn’t use

eBay’s PayPal-or an industrial-strength shopping search

engine that could help it grow into a major global player.

Not to mention that founder Craig Newmark and CEO Jim

Buckmaster seem in no hurry to expand too quickly on that

global scale.

Two of the most formidable companies on the planet,

however, are in more of a rush. Google and Microsoft certainly

have the resources; some say the invasion into eBay’s

turf began when Louis Monier, former director of advanced

technology at eBay and the wizard behind its search innovations,

was poached by Google last summer. The challengers

also have a motive: The burgeoning online classifieds business

is growing at a far faster clip than auctions.

Microsoft launched its listings service, Windows Live

Expo, in February 2006 as yet another of its Windows Live

initiatives. Users are able to post classifieds for free, limit access

by buddy lists, and focus listings geographically; a tie-in

to MSN’s Virtual Earth mapping service helps buyers and

sellers find each other easily. Says Gary Wiseman, product

unit manager, “What sets Windows Live Expo apart is that

people can set their own search parameters for goods and

services. They can define their own marketplace universe.”

Most classified advertising services generalize product

location by a predefined city location, regardless of where in

the city the product is located. However, all products and

services listed in Windows Live Expo are geographically

identified, or geo-tagged, by zip code, not city, which specifically

defines where the product is located. Windows Live

Expo customers also have the option to search for items

within a radius as small as 25 miles or as large as the entire

United States, making it easier to define a search. Windows

Live Expo listings are also integrated with MSN’s satelliteimage-

based Windows Live Local so customers can view

maps and aerial imagery of neighbourhoods they may want

to live in or see exactly where this weekend’s garage sale is.

Google’s foray, called Google Base, went live in mid-

November 2005, a powerful foundation on which Google

could build any number of products that compete with eBay.

A massive, searchable database, the free service allows users

to post everything from recipes and concert dates to used

cars and job listings, and local merchants can upload inventory

listings. Users are able to post classifieds data so buyers

can see what’s on the shelves in the bricks-and-mortar stores

in their neighbourhoods. With eBay acquiring nearly half of

its new buyers and sellers in the United States through paid

listings, mostly on Google and Yahoo, it could lose buyers if

Google puts its own search results first.

Google Base users can submit all types of online and

offline content, which becomes searchable on Google. Users

can describe any item with attributes, which will help people

find it when they do related searches. Based on an item’s relevance,

users may find their results for searches on Froogle,

Google Maps, or the main Google search engine. The more

popular individual attributes become, the more often Google

suggests them when others post the same items.

“People could bypass eBay altogether,” claims Scot

Wingo, CEO of Channel Advisor, which helps big eBay sellers

like Best Buy maximize online sales. One of Wingo’s clients,

online shoe retailer Grapevinehill, recently started listing its

inventory on Google Base in addition to eBay. Owner Mark

Fitzgerald says he made the move to reach Google’s broader

audience and that the new listings are already driving traffic to

his store: “We definitely see some momentum building.”

eBay isn’t blind to this shift in e-commerce. Its recent

acquisitions and launches-comparison site Shopping.com

and international online classifieds sites Kijiji, Gumtree, and

LoQUo-lend themselves to the online listings business.

Kijiji, which means “village” in Swahili, and the others provide

international online classifieds Web sites that offer a

place for people in many cities in Asia, Europe, the United

Kingdom, Australia, Canada, New Zealand, and South Africa

to meet via personals, share ideas, buy or trade goods and services,

find accommodations, or share information on housing,

real estate, jobs, and other topics.

Then in September 2005, eBay acquired Luxembourgbased

Skype Technologies SA, the global Internet communications

company, for approximately $2.6 billion in upfront

cash and eBay stock. eBay claimed that that Skype, eBay, and

PayPal create an unparalleled e-commerce and communications

engine for buyers and sellers around the world.

eBay defended the huge premium it paid for Skype (the

Economist noted that Skype had yet to make a dime’s worth of

profit) by emphasizing that online shopping depends on a

number of factors to function well and that communications,

like payments and shipping, is a critical part of this process.

Skype will streamline and improve communications between

buyers and sellers as it is integrated into the eBay marketplace,

argues eBay. Buyers will gain an easy way to talk to

sellers quickly and get the information they need to buy, and

sellers can more easily build relationships with customers

F

and close sales. As a result, eBay hopes that Skype (which

then had 54 million members in 225 countries, was adding

about 150,000 users every day, and was the market leader in

nearly all countries it does business) will increase the velocity

of trade on eBay, especially in categories that require

more involved communications such as used cars, business

and industrial equipment, and high-end collectibles.

eBay CEO Meg Whitman struck back again in mid-

2006 with an alliance of sorts with Yahoo, which will sell ads

for eBay’s sites and promote eBay’s PayPal payment service

as a way for consumers to pay for Yahoo services. That undoubtedly

led to a surprise deal with Google later that year,

in which Google agreed to promote Skype calls on its Web

site, while eBay will allow Google to place ads on eBay’s Web

sites in markets outside the United States.

Actually, say some analysts, eBay’s strongest defense

could turn out to be its PayPal fraud and payment staff-

more than 1,000 employees-which Google and Microsoft

have yet to match. “It’s a huge advantage,” says analyst David

Edwards of American Technology Research. “People overlook

how complicated eBay’s business is.”

These case