Microsoft heads effort to halt eBay’s grip on online auctions

A consortium of more than 100 companies, headed by
Microsoft, announced a major assault on the market for online auction
sales, which is currently dominated by eBay. The group said they are
supporting eBay competitor FairMarket. Each of the companies will link its
respective site and auction services to the FairMarketPlace at http://auctions.msn.com.

EBay has dominated the online auction market, often sparking
controversy with such recent offerings as an entire high-tech executive
team, a human kidney and a new-born baby. In 1998, roughly one million
people took part in online auctions. That number will grow to 14 million
by 2003 according to Forrester Research. Ebay generates $7 million each
day in gross merchandise sales, which is 40 to 50 times greater than the
combined volumes sold via Amazon.com and Yahoo!, which offer the next
largest auction sites on the Internet.

The FairMarketPlace will provide software to host the behind-the-scenes
network that will allow participating companies and individuals to offer
goods for auction across a network of sites. "We're not directly
taking on eBay,"said company founder Scott Randall. "Rather than
forcing a user to go to an auction, we're bringing the auction to where
the users are." Ebay spokesman Kevin Pursglove in San Jose, said his
company will be able to compete effectively with the FairMarketPlace:
"eBay has a clear focus. We do auctions and auctions alone. And we
are also a very nimble company and can respond to customer demands very
quickly. Can a consortium of a lot of companies do that? I don't
know." Besides Microsoft, other network participants include
ExciteAtHome, Cyberian Outpost, Boston.com, TicketMaster Online,
Fashionmall.com, CBS Sportsline's sporting goods store, and Viacom's VH1
music network.

The new network will house all listings in the same database and allow
consumers to see and bid on items up for sale through the Lycos site.
FairMarket gets one-third of the fees generated by each transaction.
Another third will go to the site through which the item was purchased,
and the remaining third will go to the site that offered the product. Fees
vary according to site but are usually around 2 per cent.

"Really, all the new portals basically realized that this was the
way it was going to shake out. The only way an auction site will survive
out there will be to be a part of a larger network," Randall said.
eBay's Pursglove disagreed, saying that eBay offers both a single location
to do business, but also a place to socialize and meet friends, combining
the features of an auction site with an online chat room. He said such
features drive repeat business.

Analysts seemed to side with eBay, saying the latest effort appears
destined for failure.The main reason is that eBay has such a large
following that most sellers won’t consider listing their product with
another auction house. By the same token, buyers typically go to the place
with the most choice. EBay lists 3 million items for sale on average.
FairmarketPlace has about 70,000 items.

Microsoft and Ford team up on custom car ordering

Meanwhile, in another development, Microsoft and Ford Motor Co.
announced they are teaming up to allow car buyers to order their new car
online and according to their specifications, including paint color, type
and color of the upholstery, stereo system and other details.

The service will be available from Microsoft's CarPoint Web site.Once a
customized car is complete, the Web site user is referred to a dealer, who
would negotiate the price and deliver the car. Ford and other

car manufacturers cannot sell their products online directly to
consumers without violating U.S. Franchise laws designed to protect local
franchise businesses. "CarPoint is going to change the way cars are
bought and sold with technology that brings together manufacturers and
dealers to deliver the services consumers want,'' said Microsoft president
Steve Ballmer."The consumer is driving a revolution in automotive
retailing, and Ford intends to be at the forefront of that revolution,''
added Ford CEO Jacques Nasser.

Nasser said he called Microsoft’s Bill Gates about five months ago to
propose the joint project. He ended up speaking with Ballmer, who warned
him that e-commerce works in high speed. "Four weeks later I called
and said I'm ready to move, and now four months later here we are,'' said
Nasser.