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

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CIOL Bureau
New Update

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.

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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.

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"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

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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.

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