Fool.com: eBay Downed Again (News) August 6, 1999

eBay Downed Again

August 6, 1999

The site of online auctioneer eBay (Nasdaq: EBAY) has been down since 4:30 a.m. Pacific Time, amounting to (as of this writing) a serious six-hour outage thus far. Many would-be visitors to the site cannot even access the main page. A long-spinning browser icon eventually spits back: "A connection with the server could not be established."

That's ugly.

eBay's June 10 crash of 22 hours cost the company up to $5 million in revenue. Since then, the site has had four more small outages before today, despite management's multi-million dollar investment in a back-up system, new hardware, and additional staff. The back-up system will be in place by year-end.

Management has not described the exact nature of today's problem other than saying that it is hardware and software related. It is apparently a different problem (unfortunately) from past problems. In the past, the site would be accessible but bids could not be placed. Now the entire site is good as gone. Poof. Management took the site down to address the situation.

eBay has created an infrastructure that is amazing -- when it works. With 2.5 million items for auction at last count, the site ingests tens of millions of bids every day. Simultaneously, eBay's technology sends confirmations upon each new bid to all pertinent bidders, keeps tabs on the high bidder, and ticks down the minutes remaining for each of the 2.5 million items before sending confirmation e-mails to both the seller and the winning bidder.

That's far from all. Aside from sending daily e-mail updates to every relevant eBay user (anyone with something for auction, or anyone who has a bid that has been displaced), the site has scaled from a few hundred thousand users to 5.6 million in under three years, and it sustains 1.5 billion page hits per month.

So, when it works, it is impressive. But since this summer, it has been less than impressive. Other than shareholders, business patrons are suffering most. Many eBay users have a business on the site and depend on eBay for income. The important question is, will they migrate elsewhere?

The likely answer: only if the masses do.

The most viable auction alternatives to eBay are Yahoo! (Nasdaq: YHOO) and Amazon (Nasdaq: AMZN), but the difficult prospect for most eBay users is knowing where to go to "meet" everyone else. Auctions work best with critical mass, of course -- with a giant crowd. eBay is the watering hole. Even when it's dry (not working), it's the place that everyone knows to return to when it flows again. Therefore, once eBay users set up shop or develop a good reputation on eBay, it will take a great deal to displace them.

How much more will it take?

At this point, another day-long outage could be enough to push the ball rolling. That might be enough to cause many users to begin routinely using other auction sites, and it may even instigate a mass movement that is coordinated on some level. People running a business on eBay could prepare for the next outage by telling patrons (once eBay is up again) to visit them on Amazon if eBay goes down again for a long period of time. Meanwhile, shoppers looking for something now can easily visit Yahoo! or Amazon at no expense. When eBay was down 22 hours in June, Yahoo! Auctions saw a substantial rise in traffic.

eBay's competitive position was recently outlined in a Rule Breaker column. The column concluded by stating that the company has such a lead in the online consumer-to-consumer market that perhaps only the company itself could screw that lead up. Continued outages could eventually do the trick. Confidence lost is three times as difficult to regain. eBay must make its site as reliable as Yahoo!'s site has been since its inception.

eBay has blamed Sun Microsystems (Nasdaq: SUNW) for some of its technological problems in the past. The site might be up and running again by the time you read this, making this another short-term blip in history. But these kinds of blips, repeated too often, can ruin a business's brand. eBay employees are going to face a long weekend, and perhaps weeks ahead, until the site is 99.9% reliable.

By Jeff Fischer (TMF Jeff)

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