Sunday, April 29, 2007
eBay: Redefining 'It' in More Ways Than One
In its television ads, eBay describes itself as the place to get "it," whatever it may be. The company deliberately leaves "it" undefined to emphasize the immense variety of goods available for auction on its site. "It" is anything a consumer can imagine. However, as eBay expands into myriad new businesses -- from telecommunications to social networking -- some investors are puzzling over what it (eBay) is becoming.
Since shelling out US$1.5 billion in 2002 to acquire online payment processor PayPal, eBay has aggressively expanded into areas well beyond its core business of charging people fees to auction off goods via the Internet. Over the last five years, a spate of acquisitions -- some of which are just now generating significant profits -- has made the company into something of an enigma. eBay is a Web auctioneer. It's an online payment processor and bank of sorts (PayPal). It's a ticket seller (StubHub). It's a global Internet telephone service (Skype). It's a classified ad service (Kijiji).
Now eBay is said to be moving into the social search business. Tech industry blogs such as GigaOm and TechCrunch are buzzing that eBay is in talks to acquire StumbleUpon, a popular site that lets users find other Web sites based on their interests and the recommendations of others. Both eBay and StumbleUpon declined comment.
The difficulty of defining eBay and how its businesses fit together partially explains the reaction to the company's first quarter earnings on April 18. eBay reported profits of $377 million, a 52 percent increase over the prior year. Much of the growth stemmed from eBay's new businesses: "Our diverse portfolio of businesses that we began to build a few years ago is showing sustainable traction. We're extremely pleased with their results this quarter," eBay chief executive Meg Whitman told analysts during a conference call.
Such growth would typically impress investors. Particularly when Wall Street was predicting about $500 million less than the $1.77 billion in revenues eBay reported. However, investors didn't show much enthusiasm. The stock declined 3.6 percent on April 19 and regained just under 1 percent on April 20.
What's troubling investors is a slowdown in the company's "core" auction business, even as other businesses post gains. (It also didn't help that IAC/InterActiveCorp's Ticketmaster filed suit the same day over tickets sold through eBay's StubHub business.) eBay's auction business accounts for 69 percent of its revenue. That business grew 23 percent on sales of $1.25 billion, but investors have been used to growth rates of 40 percent.
Active auction users grew 10 percent -- a significant drop considering the category grew 25 percent during the first quarter of 2006 compared to the prior year. "Our concern is the core eBay business has been in a pretty steady downward spiral for several years now and it doesn't seem to be reversing itself," says Derek Brown, an analyst at Cantor Fitzgerald. Brown is recommending investors shed the stock.
The trouble with that view, say some analysts, is that it fails to see what eBay is evolving into. Tim Boyd, an analyst at American Technology Research who correctly anticipated eBay's revenues would beat the Street's expectations, sees eBay as an e-commerce and online advertising company that uses each business to fuel the other. "It doesn't make sense to look at this thing as solely an auction company anymore," says Boyd.
Indeed, eBay sees itself as a portfolio of companies that encompasses all the activities people perform on the Internet: trade, communicate, shop, search and entertain. The eBay bulls see it as a diversified company with a hand in each one of the Internet's cash pots. The newer members of eBay's portfolio are gaining momentum. PayPal grew 31 percent on revenues of $439 million. Its user base expanded 36 percent, to 143 million accounts. For eBay, an initial attraction of PayPal was its potential to enable sellers and buyers to share one trusted payment service instead of registering and working with multiple merchant bank cards. Facilitating transactions is important for eBay, which makes most of its money from taking a cut of sales.
PayPal's largest growth, however, has come from outside eBay. In the first quarter of 2007, it processed roughly $11.4 billion in transactions -- about $4.4 billion was on non-eBay sites. That amount was a 51 percent increase from the prior year. For PayPal users, the service functions as something of an online bank, delivering interest, processing transactions and even wiring money to friends through eBay's Internet phone service Skype . "The company (PayPal) has a lot of potential," says Matthew Kelmon, a portfolio manager at Kelmoore Investment, which owns eBay shares.
eBay jumped into the communications business by acquiring Skype in September 2005, for $2.6 billion plus stock. The service posted its first profitable quarter this year, growing 123 percent, to sales of $79 million, and adding 101 million new users. (Skype now has nearly 200 million customers.) eBay uses Skype to lubricate transactions by making it easier for consumers to talk to sellers, ask questions and build trust. Skype also is a leader in the market for Web phones.
In the future, eBay could merge Skype with its classified advertising businesses to serve click-to-call ads, tapping into the market for local advertising. eBay is currently exploring such a service with Google and Yahoo, separately. Market researcher Borrell Associates estimates that about $8.6 billion will be spent on local Web ads in 2010.
eBay's advertising business and other small services also posted significant growth, swelling 65 percent to $60 million. This business is perhaps the most complicated of all because it is not confined to simply one kind of advertising. eBay has been serving classified ads through a network of foreign ad sites, such as Kijiji and Marketplaats, as well as via its 25 percent stake in Craigslist. It shares advertising revenue with Google, which serves search-related text ads on its non-U.S. auction pages. The company also has a wide-ranging advertising deal with Yahoo. By 2010, Internet advertising is expected to become a $27.8 billion market in the U.S. and a $29.5 billion market outside the U.S., according to a January Oppenheimer & Co. report.
With such large markets available for eBay's new businesses, it is not difficult to imagine a future in which eBay's auction business no longer dominates the company. eBay sees that long-term potential, though company executives underscore that a chief objective is to "reinvigorate" the core business. An acquisition such as StumbleUpon could help eBay's auction business by leveraging its recommendation technology to suggest other specific items related to goods sellers are bidding on or have bought. Currently, eBay recommends related categories of products.
Of course, eBay also could integrate Skype with StumbleUpon, using the call features to strengthen the networking aspects of both. It could potentially integrate the service with its classified ad business, using it to recommend ads related to products people are looking for.
With the variety of businesses that are now part of the company, what is eBay? More than just auctions -- that's for sure.
Site Credibility Pays! Get The SSL Privacy Seal!
Since shelling out US$1.5 billion in 2002 to acquire online payment processor PayPal, eBay has aggressively expanded into areas well beyond its core business of charging people fees to auction off goods via the Internet. Over the last five years, a spate of acquisitions -- some of which are just now generating significant profits -- has made the company into something of an enigma. eBay is a Web auctioneer. It's an online payment processor and bank of sorts (PayPal). It's a ticket seller (StubHub). It's a global Internet telephone service (Skype). It's a classified ad service (Kijiji).
Now eBay is said to be moving into the social search business. Tech industry blogs such as GigaOm and TechCrunch are buzzing that eBay is in talks to acquire StumbleUpon, a popular site that lets users find other Web sites based on their interests and the recommendations of others. Both eBay and StumbleUpon declined comment.
The difficulty of defining eBay and how its businesses fit together partially explains the reaction to the company's first quarter earnings on April 18. eBay reported profits of $377 million, a 52 percent increase over the prior year. Much of the growth stemmed from eBay's new businesses: "Our diverse portfolio of businesses that we began to build a few years ago is showing sustainable traction. We're extremely pleased with their results this quarter," eBay chief executive Meg Whitman told analysts during a conference call.
Such growth would typically impress investors. Particularly when Wall Street was predicting about $500 million less than the $1.77 billion in revenues eBay reported. However, investors didn't show much enthusiasm. The stock declined 3.6 percent on April 19 and regained just under 1 percent on April 20.
What's troubling investors is a slowdown in the company's "core" auction business, even as other businesses post gains. (It also didn't help that IAC/InterActiveCorp's Ticketmaster filed suit the same day over tickets sold through eBay's StubHub business.) eBay's auction business accounts for 69 percent of its revenue. That business grew 23 percent on sales of $1.25 billion, but investors have been used to growth rates of 40 percent.
Active auction users grew 10 percent -- a significant drop considering the category grew 25 percent during the first quarter of 2006 compared to the prior year. "Our concern is the core eBay business has been in a pretty steady downward spiral for several years now and it doesn't seem to be reversing itself," says Derek Brown, an analyst at Cantor Fitzgerald. Brown is recommending investors shed the stock.
The trouble with that view, say some analysts, is that it fails to see what eBay is evolving into. Tim Boyd, an analyst at American Technology Research who correctly anticipated eBay's revenues would beat the Street's expectations, sees eBay as an e-commerce and online advertising company that uses each business to fuel the other. "It doesn't make sense to look at this thing as solely an auction company anymore," says Boyd.
Indeed, eBay sees itself as a portfolio of companies that encompasses all the activities people perform on the Internet: trade, communicate, shop, search and entertain. The eBay bulls see it as a diversified company with a hand in each one of the Internet's cash pots. The newer members of eBay's portfolio are gaining momentum. PayPal grew 31 percent on revenues of $439 million. Its user base expanded 36 percent, to 143 million accounts. For eBay, an initial attraction of PayPal was its potential to enable sellers and buyers to share one trusted payment service instead of registering and working with multiple merchant bank cards. Facilitating transactions is important for eBay, which makes most of its money from taking a cut of sales.
PayPal's largest growth, however, has come from outside eBay. In the first quarter of 2007, it processed roughly $11.4 billion in transactions -- about $4.4 billion was on non-eBay sites. That amount was a 51 percent increase from the prior year. For PayPal users, the service functions as something of an online bank, delivering interest, processing transactions and even wiring money to friends through eBay's Internet phone service Skype . "The company (PayPal) has a lot of potential," says Matthew Kelmon, a portfolio manager at Kelmoore Investment, which owns eBay shares.
eBay jumped into the communications business by acquiring Skype in September 2005, for $2.6 billion plus stock. The service posted its first profitable quarter this year, growing 123 percent, to sales of $79 million, and adding 101 million new users. (Skype now has nearly 200 million customers.) eBay uses Skype to lubricate transactions by making it easier for consumers to talk to sellers, ask questions and build trust. Skype also is a leader in the market for Web phones.
In the future, eBay could merge Skype with its classified advertising businesses to serve click-to-call ads, tapping into the market for local advertising. eBay is currently exploring such a service with Google and Yahoo, separately. Market researcher Borrell Associates estimates that about $8.6 billion will be spent on local Web ads in 2010.
eBay's advertising business and other small services also posted significant growth, swelling 65 percent to $60 million. This business is perhaps the most complicated of all because it is not confined to simply one kind of advertising. eBay has been serving classified ads through a network of foreign ad sites, such as Kijiji and Marketplaats, as well as via its 25 percent stake in Craigslist. It shares advertising revenue with Google, which serves search-related text ads on its non-U.S. auction pages. The company also has a wide-ranging advertising deal with Yahoo. By 2010, Internet advertising is expected to become a $27.8 billion market in the U.S. and a $29.5 billion market outside the U.S., according to a January Oppenheimer & Co. report.
With such large markets available for eBay's new businesses, it is not difficult to imagine a future in which eBay's auction business no longer dominates the company. eBay sees that long-term potential, though company executives underscore that a chief objective is to "reinvigorate" the core business. An acquisition such as StumbleUpon could help eBay's auction business by leveraging its recommendation technology to suggest other specific items related to goods sellers are bidding on or have bought. Currently, eBay recommends related categories of products.
Of course, eBay also could integrate Skype with StumbleUpon, using the call features to strengthen the networking aspects of both. It could potentially integrate the service with its classified ad business, using it to recommend ads related to products people are looking for.
With the variety of businesses that are now part of the company, what is eBay? More than just auctions -- that's for sure.
Site Credibility Pays! Get The SSL Privacy Seal!
Saturday, April 28, 2007
Make Time for Web Marketing 2.0
How significant is a Web site to your organization? My impression is that for businesses who have devoted the resources to develop and maintain an effective online presence, its Web site's impact is unprecedented, and for the folks who haven't gone down that path, it's value and profitability are marginal.
The term "Web 2.0" means different things to different people. In some circles, it refers to the emergence of social networking and personalization as the new frontier of the Internet. Facebook, MySpace, YouTube and the rest were not on the radar screen a few years ago. From my perspective, I look to the evolution of both the quality and intuitiveness of Web sites as well as the tools and channels that are now available to efficiently market those sites. The focus for this article is the opportunities to increase the flow of qualified visitors to a Web site by utilizing more advanced tactics.
Back for a moment to companies who haven't been able to make the Internet work for them -- it's tempting to excuse the industry as being one that doesn't lend itself to an online situation. While there may be a handful of circumstances where this is actually the case (though none immediately come to mind), the real test is whether (competing) firms are paying for traffic on a consistent basis for words that are mission critical to the business. If the answer is yes, then it means the opportunity exists if the company can be diligent enough to pursue it.
I use the word diligent, because there is nothing easy about Internet marketing today. That window of opportunity closed several years ago. In order to be truly successful online -- in addition to having a very good site -- a company needs to effectively employ both search engine marketing (SEM) and search engine optimization (SEO). Below are several Web 2.0 recommendations for SEM and SEO. While there is a number of distinctions between SEO and SEM -- the most notable being that with SEO the traffic is nonpaid and with SEM there is a cost -- they share a common thread. Both efforts are driven by keywords, and the more well conceived the list, the more favorable the end result will be.
Although there are a number of tools that firms such as ours use to guide the keyword selection process, it's also vital for the client to spend quality time speaking to colleagues and clients and studying competitors' sites in order to determine the most appropriate keyword menu to pursue. While there may be some subtle differences between the keyword list for SEO and SEM, the majority of keywords will be the same. Search engine rankings are a function of sophisticated algorithms. Minor changes and updates can alter your rankings. While it is true that the algorithms are a moving target, which no one can fully explain, the factors that lead a Web site to perform well in the natural results are fairly consistent.
A top-level issue is the degree to which a site contains hearty content that aligns closely to the keywords which are most important to the site. If, for instance, the keywords in the Meta tags, etc., are related to human resources consulting and the content speaks to employee training programs, then there is a problem. While that may sound obvious, you would be surprised how often companies change product lines or direction, and don't fully incorporate the new direction into both the content and architecture of its Web site. Try also to limit the number of keywords and phrases per page to two or three. Incorporating content about more than two or three keywords onto any Web page will weaken your message on the page, which won't be viewed favorably by the search engines.
Another step in making your site as search engine-friendly as possible is to ensure that the architecture doesn't present any obvious roadblocks. Flash is probably the best example of a technology that is much more aligned for the end user than for the search engine spidering process. It's OK to have some Flash on the site, but it's not a good idea, from a search engine ranking perspective, to have a home page that is all Flash. In general, the less, the better.
Both content management systems (CMS) and template driven Web sites can be problematic for SEO. The problem with many of these frameworks is that the site owner has very little ability to make modifications to the coding of the site and the majority of templates are not SEO-friendly to begin with. Before purchasing a new Web site that is template or CMS driven, be sure to investigate the degree to which it has been designed with SEO requirements in mind.
Lastly, commit to a link development initiative, as link popularity is a component of the ranking criteria for the major engines, particularly Google. The greater the number of quality inbound links you have to your site, the better. Be careful, as link building is often abused, which can cause more harm than good. Incrementally adding relevant links to your site is the best approach. I probably shouldn't have titled this section "advanced," because what I have to say is really simple. Just like any other component of direct marketing, it's vital to measure campaign performance -- then continue to test and refine.
What's relevant about this topic is the dramatic improvement in the tools that are available to figure out what's working and what isn't. Variables include engine selection (MSN vs. Google, etc.), keywords (broad vs. narrow, exact/negative match, etc.), as well as factors like which pages of your site are moving a prospect toward your objective in contrast to others that may be hindering a conversion.
It used to be that the cost associated with analytics programs was substantial, therefore only the largest online players could justify the expense. With free and low-cost programs like Google Analytics, the investment is now limited to the time required to set the tools up properly (including coding the site) and the post click analysis of the data. I continue to hear stories of larger organizations abandoning their high end solutions for this new wave of technology, as it's much easier to both install and evaluate important data in a timely manner.
The number of companies who have a genuine understanding of the activity on their site and more specifically their SEM related statistics remains minute. The opportunity to gain a competitive edge through utilizing this data is significant.
Improved Web marketing is not about utilizing any particular technology or channel, it is about investing time and resources to pinpoint and execute a profit-generating strategy . For certain organizations this is practiced continuously (both online and off-line). For others, now is a perfect time to get refocus and make the Internet a vital component of your marketing efforts.
Join The Privacy Seal Program! Site Credibility Pays.
The term "Web 2.0" means different things to different people. In some circles, it refers to the emergence of social networking and personalization as the new frontier of the Internet. Facebook, MySpace, YouTube and the rest were not on the radar screen a few years ago. From my perspective, I look to the evolution of both the quality and intuitiveness of Web sites as well as the tools and channels that are now available to efficiently market those sites. The focus for this article is the opportunities to increase the flow of qualified visitors to a Web site by utilizing more advanced tactics.
Back for a moment to companies who haven't been able to make the Internet work for them -- it's tempting to excuse the industry as being one that doesn't lend itself to an online situation. While there may be a handful of circumstances where this is actually the case (though none immediately come to mind), the real test is whether (competing) firms are paying for traffic on a consistent basis for words that are mission critical to the business. If the answer is yes, then it means the opportunity exists if the company can be diligent enough to pursue it.
I use the word diligent, because there is nothing easy about Internet marketing today. That window of opportunity closed several years ago. In order to be truly successful online -- in addition to having a very good site -- a company needs to effectively employ both search engine marketing (SEM) and search engine optimization (SEO). Below are several Web 2.0 recommendations for SEM and SEO. While there is a number of distinctions between SEO and SEM -- the most notable being that with SEO the traffic is nonpaid and with SEM there is a cost -- they share a common thread. Both efforts are driven by keywords, and the more well conceived the list, the more favorable the end result will be.
Although there are a number of tools that firms such as ours use to guide the keyword selection process, it's also vital for the client to spend quality time speaking to colleagues and clients and studying competitors' sites in order to determine the most appropriate keyword menu to pursue. While there may be some subtle differences between the keyword list for SEO and SEM, the majority of keywords will be the same. Search engine rankings are a function of sophisticated algorithms. Minor changes and updates can alter your rankings. While it is true that the algorithms are a moving target, which no one can fully explain, the factors that lead a Web site to perform well in the natural results are fairly consistent.
A top-level issue is the degree to which a site contains hearty content that aligns closely to the keywords which are most important to the site. If, for instance, the keywords in the Meta tags, etc., are related to human resources consulting and the content speaks to employee training programs, then there is a problem. While that may sound obvious, you would be surprised how often companies change product lines or direction, and don't fully incorporate the new direction into both the content and architecture of its Web site. Try also to limit the number of keywords and phrases per page to two or three. Incorporating content about more than two or three keywords onto any Web page will weaken your message on the page, which won't be viewed favorably by the search engines.
Another step in making your site as search engine-friendly as possible is to ensure that the architecture doesn't present any obvious roadblocks. Flash is probably the best example of a technology that is much more aligned for the end user than for the search engine spidering process. It's OK to have some Flash on the site, but it's not a good idea, from a search engine ranking perspective, to have a home page that is all Flash. In general, the less, the better.
Both content management systems (CMS) and template driven Web sites can be problematic for SEO. The problem with many of these frameworks is that the site owner has very little ability to make modifications to the coding of the site and the majority of templates are not SEO-friendly to begin with. Before purchasing a new Web site that is template or CMS driven, be sure to investigate the degree to which it has been designed with SEO requirements in mind.
Lastly, commit to a link development initiative, as link popularity is a component of the ranking criteria for the major engines, particularly Google. The greater the number of quality inbound links you have to your site, the better. Be careful, as link building is often abused, which can cause more harm than good. Incrementally adding relevant links to your site is the best approach. I probably shouldn't have titled this section "advanced," because what I have to say is really simple. Just like any other component of direct marketing, it's vital to measure campaign performance -- then continue to test and refine.
What's relevant about this topic is the dramatic improvement in the tools that are available to figure out what's working and what isn't. Variables include engine selection (MSN vs. Google, etc.), keywords (broad vs. narrow, exact/negative match, etc.), as well as factors like which pages of your site are moving a prospect toward your objective in contrast to others that may be hindering a conversion.
It used to be that the cost associated with analytics programs was substantial, therefore only the largest online players could justify the expense. With free and low-cost programs like Google Analytics, the investment is now limited to the time required to set the tools up properly (including coding the site) and the post click analysis of the data. I continue to hear stories of larger organizations abandoning their high end solutions for this new wave of technology, as it's much easier to both install and evaluate important data in a timely manner.
The number of companies who have a genuine understanding of the activity on their site and more specifically their SEM related statistics remains minute. The opportunity to gain a competitive edge through utilizing this data is significant.
Improved Web marketing is not about utilizing any particular technology or channel, it is about investing time and resources to pinpoint and execute a profit-generating strategy . For certain organizations this is practiced continuously (both online and off-line). For others, now is a perfect time to get refocus and make the Internet a vital component of your marketing efforts.
Join The Privacy Seal Program! Site Credibility Pays.
Friday, April 06, 2007
Selecting Servers for the E-Commerce Operation
After years of hard work and careful design, the big moment has arrived -- you are finally ready to go live with your online retail operation. However, just one look at potential competitors such as Amazon, eBay, Wal-Mart and Target and it's readily apparent that these companies have likely spent millions creating and staffing their respective infrastructures. No wonder they rank among the most popular online shopping sites. Businesses like Amazon and eBay at least had to learn to walk before they ran to the top of their market. They did so at a time when the choices in hardware for high-end e-commerce applications were slim at best. Currently, prospective e-tailers have a wide variety of options for taking their businesses online. More choices, however, means that the decision-making process takes on even greater importance.
The first major decision for any company planning to establish an online presence is whether to go with a hosted e-commerce solution or whether to create their own on-premises data center. The decision to build a data center in-house, according to Vick Vaishnavi, director of product marketing at BladeLogic, depends on two criteria: economics and obligation. "The criteria are more about economics than what is the right thing to do," he said. "It is more of an economic exercise." If a company has only one e-commerce application and "nothing major" it is trying to push, Vaishnavi recommends opting for a hosted solution. "The cost of building out a data center and maintaining it will be a lot more than the payback analysis or the [return on investment] will be in years if I'm doing everything myself."
In addition, businesses with on-premise data centers sign up to all of the inherent obligations that accompany it: uptime, change configurations, change responsiveness and compliance assurance, to name a few. "All that becomes my headache, which means I have to hire the appropriate kind of people who can do that," Vaishnavi said. "The advantage I would get is that I am master of my own destiny," Vaishnavi continued. "I can't blame anyone for any failures, but the success are all my own." Companies also need to determine how risk-averse they are, Vaishnavi noted. If they have credit card information and are recording a lot of transactions, as well as working with federal agencies that require tighter security and greater levels of encryption, then they may want to invest in their own data center. "If they do the economics and have a hosting provider who says it will charge them a fortune to do the same thing, then it might be cheaper for them to invest in their own data center if that is the line of business they are going to be in. It will pay back in two to three years, but at least they are assured of continued revenue. "It is not a yes or no answer about whether you should build your own data center. It is really a function of economics and what your business strategy is and the business' requirements over time."
For many organizations the principle concern after costs is the level of integration between e-commerce applications, Carl Zaldivar, president and chief executive officer of BizAutomation.com, a provider of on-premise and hosted e-commerce solutions, said. "Businesses will need a shopping cart, some sort of inventory to pull items from a catalog," he said. Along with all that, they will also need shipping, accounting, and transaction applications. According to Zaldivar, the cost benefit of hosted versus in-house is that with a hosted solution, companies do not have to pay a lot up front. On the other hand, with an in-house setup businesses will not find themselves "on the treadmill forever" paying fees. Instead, after the initial expenditure to build the data center, their costs will deal with expenses such as maintenance and energy.
Companies setting up a on-premise database have to choose which platform best meets their needs -- Linux , Solaris, Windows or any flavor of unix, namely HPUX or AIX, BladeLogic's Vaishnavi explained. Typically, high-end e-commerce servers include rack mountable server appliances that come preloaded with e-commerce software and tools, including Web services such as IIS, Apache, iPlanet, Tomcat and application services including Weblogic and Websphere, as well as database services such as Oracle and Microsoft SQL, for conducting secure e-commerce transactions using secure socket layer (SSL). "Vendors who supply these include HP, Dell, IBM and Sun [Microsystems]," he said. At NetSuite, a provider of hosted business solutions, Mini Peiris, vice president of product management, said Oracle is the database application server of choice, the servers run the Linux operating system and the application layer is Apache. For businesses looking to go on-premise, scalability is also a major consideration. "We designed [the data center] so that we could spread the load out across a lot of small boxes," rather than using a mainframe and keeping all customers on one large system, she said.
"The reason for us to go with smaller servers and Linux was kind of simple," she continued. "First off it helps us scale quicker, meaning that if we see a particular customer's performance dropping off, then we are able to quickly split that database between two machines rather than the overhead it would take to bring on, if you take a mainframe approach, to bring that on. That gives us efficiencies of scalability there. "The other reason is because we have a unique approach to upgrades," she added. "Even though we are a hosted system, we don't upgrade everyone overnight in one go. We actually phase it out. So, for a major release or upgrade, we will take as long as three to four months to gradually bring different portions of our customer base up to the new release. The reason we are able do that is part of that architecture because we have smaller isolated servers we are running people on."
Increase Online Sales - Site Credibility Pays - At Guardian eCommerce.
The first major decision for any company planning to establish an online presence is whether to go with a hosted e-commerce solution or whether to create their own on-premises data center. The decision to build a data center in-house, according to Vick Vaishnavi, director of product marketing at BladeLogic, depends on two criteria: economics and obligation. "The criteria are more about economics than what is the right thing to do," he said. "It is more of an economic exercise." If a company has only one e-commerce application and "nothing major" it is trying to push, Vaishnavi recommends opting for a hosted solution. "The cost of building out a data center and maintaining it will be a lot more than the payback analysis or the [return on investment] will be in years if I'm doing everything myself."
In addition, businesses with on-premise data centers sign up to all of the inherent obligations that accompany it: uptime, change configurations, change responsiveness and compliance assurance, to name a few. "All that becomes my headache, which means I have to hire the appropriate kind of people who can do that," Vaishnavi said. "The advantage I would get is that I am master of my own destiny," Vaishnavi continued. "I can't blame anyone for any failures, but the success are all my own." Companies also need to determine how risk-averse they are, Vaishnavi noted. If they have credit card information and are recording a lot of transactions, as well as working with federal agencies that require tighter security and greater levels of encryption, then they may want to invest in their own data center. "If they do the economics and have a hosting provider who says it will charge them a fortune to do the same thing, then it might be cheaper for them to invest in their own data center if that is the line of business they are going to be in. It will pay back in two to three years, but at least they are assured of continued revenue. "It is not a yes or no answer about whether you should build your own data center. It is really a function of economics and what your business strategy is and the business' requirements over time."
For many organizations the principle concern after costs is the level of integration between e-commerce applications, Carl Zaldivar, president and chief executive officer of BizAutomation.com, a provider of on-premise and hosted e-commerce solutions, said. "Businesses will need a shopping cart, some sort of inventory to pull items from a catalog," he said. Along with all that, they will also need shipping, accounting, and transaction applications. According to Zaldivar, the cost benefit of hosted versus in-house is that with a hosted solution, companies do not have to pay a lot up front. On the other hand, with an in-house setup businesses will not find themselves "on the treadmill forever" paying fees. Instead, after the initial expenditure to build the data center, their costs will deal with expenses such as maintenance and energy.
Companies setting up a on-premise database have to choose which platform best meets their needs -- Linux , Solaris, Windows or any flavor of unix, namely HPUX or AIX, BladeLogic's Vaishnavi explained. Typically, high-end e-commerce servers include rack mountable server appliances that come preloaded with e-commerce software and tools, including Web services such as IIS, Apache, iPlanet, Tomcat and application services including Weblogic and Websphere, as well as database services such as Oracle and Microsoft SQL, for conducting secure e-commerce transactions using secure socket layer (SSL). "Vendors who supply these include HP, Dell, IBM and Sun [Microsystems]," he said. At NetSuite, a provider of hosted business solutions, Mini Peiris, vice president of product management, said Oracle is the database application server of choice, the servers run the Linux operating system and the application layer is Apache. For businesses looking to go on-premise, scalability is also a major consideration. "We designed [the data center] so that we could spread the load out across a lot of small boxes," rather than using a mainframe and keeping all customers on one large system, she said.
"The reason for us to go with smaller servers and Linux was kind of simple," she continued. "First off it helps us scale quicker, meaning that if we see a particular customer's performance dropping off, then we are able to quickly split that database between two machines rather than the overhead it would take to bring on, if you take a mainframe approach, to bring that on. That gives us efficiencies of scalability there. "The other reason is because we have a unique approach to upgrades," she added. "Even though we are a hosted system, we don't upgrade everyone overnight in one go. We actually phase it out. So, for a major release or upgrade, we will take as long as three to four months to gradually bring different portions of our customer base up to the new release. The reason we are able do that is part of that architecture because we have smaller isolated servers we are running people on."
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WTO Rules Against US Net Gambling Ban
The World Trade Organization (WTO) on Friday said the U.S. ban on Internet gambling is out of line with international trade policy. This ruling gives hope to Web gambling firms that have been battered by U.S. regulatory and law enforcement activity in recent months. The WTO ruled in favor of the Caribbean nations of Antigua and Barbuda, which had filed a complaint in May of 2004 and had already won preliminary judgment against the U.S., including possible trade sanctions. That ruling said the U.S. had failed to live up to an earlier agreement to open up Internet gambling after it had put adequate regulations in place. The U.S. had filed an appeal, which was essentially rejected in Friday's ruling.
In a 51-page ruling, the WTO dispute settlement board found that the U.S. had not taken steps to better align its own domestic regulation of gambling with its prohibition against U.S. residents placing bets at overseas-based Internet casinos. The panel found that the United States missed "an opportunity to remove the ambiguity" and contradictions between intrastate regulations and international rules. "Instead, rather than take that opportunity, the U.S. enacted legislation that confirmed that the ambiguity at the heart of this dispute remains." Antigua and other nations have argued that because the U.S. allows remote betting on horse racing and other types of gambling within its borders, it was in violation of international trade law with its ban on Web gambling. Since the dispute was first filed, the U.S. has become far more aggressive in its stance against Web wagering.
While the U.S. at one time took a largely passive approach -- declaring the activity illegal but doing little to enforce the law -- that began to change last year. In the course of just a few months, President Bush signed legislation and several executives of Internet gambling companies were arrested when they traveled to the U.S. As a result, several of the world's largest Web gambling companies have seen their stocks plummet and their values decimated as they turned away from what had been one of their largest and most profitable markets out of fear of facing law enforcement crackdown.
The founder of UK-based Web payment service Neteller, a common choice for arranging payments to Internet casinos, has also been arrested, and reports have surfaced that other banks and credit card companies have been targets of gambling-related investigations. The Bush administration has also sought to distance itself from the Clinton administration's pledge to put the frameworks in place to enable international gambling to take place, calling it an oversight that did not take other existing laws into account.
In twice winning favorable rulings from the WTO, Antigua became the smallest nation ever to win a victory from the organization. Still, the country's size may leave open the question of how much leverage it has to force the U.S. to make changes. While WTO rules permit the country to take actions such as removing protections for intellectual property that originates in the U.S., it may be reluctant to further antagonize a country that provides it with goods and with a steady stream of sun-seeking tourists. The case is just a reminder of the hodgepodge of laws that make up rules about gambling on the Internet, which has all but wiped out the border distinctions upon which most older laws are built, Christiansen Capital Advisors analyst Sebastian Sinclair said.
Meanwhile, Internet gambling revenues have taken off along with the growth of the Internet, and now amount to more than US$12 billion a year and will be worth twice that amount by 2010, he noted. Officials in Antigua and Barbuda, however, say their Web casinos have seen revenues fall off sharply amid the press by the U.S. to stop betting from its residents. "The legal patchwork that's in place doesn't address today's technology," Sinclair added, noting that domestic groups are also calling on Congress to update the country's gambling laws to account for the growth of the Web.
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In a 51-page ruling, the WTO dispute settlement board found that the U.S. had not taken steps to better align its own domestic regulation of gambling with its prohibition against U.S. residents placing bets at overseas-based Internet casinos. The panel found that the United States missed "an opportunity to remove the ambiguity" and contradictions between intrastate regulations and international rules. "Instead, rather than take that opportunity, the U.S. enacted legislation that confirmed that the ambiguity at the heart of this dispute remains." Antigua and other nations have argued that because the U.S. allows remote betting on horse racing and other types of gambling within its borders, it was in violation of international trade law with its ban on Web gambling. Since the dispute was first filed, the U.S. has become far more aggressive in its stance against Web wagering.
While the U.S. at one time took a largely passive approach -- declaring the activity illegal but doing little to enforce the law -- that began to change last year. In the course of just a few months, President Bush signed legislation and several executives of Internet gambling companies were arrested when they traveled to the U.S. As a result, several of the world's largest Web gambling companies have seen their stocks plummet and their values decimated as they turned away from what had been one of their largest and most profitable markets out of fear of facing law enforcement crackdown.
The founder of UK-based Web payment service Neteller, a common choice for arranging payments to Internet casinos, has also been arrested, and reports have surfaced that other banks and credit card companies have been targets of gambling-related investigations. The Bush administration has also sought to distance itself from the Clinton administration's pledge to put the frameworks in place to enable international gambling to take place, calling it an oversight that did not take other existing laws into account.
In twice winning favorable rulings from the WTO, Antigua became the smallest nation ever to win a victory from the organization. Still, the country's size may leave open the question of how much leverage it has to force the U.S. to make changes. While WTO rules permit the country to take actions such as removing protections for intellectual property that originates in the U.S., it may be reluctant to further antagonize a country that provides it with goods and with a steady stream of sun-seeking tourists. The case is just a reminder of the hodgepodge of laws that make up rules about gambling on the Internet, which has all but wiped out the border distinctions upon which most older laws are built, Christiansen Capital Advisors analyst Sebastian Sinclair said.
Meanwhile, Internet gambling revenues have taken off along with the growth of the Internet, and now amount to more than US$12 billion a year and will be worth twice that amount by 2010, he noted. Officials in Antigua and Barbuda, however, say their Web casinos have seen revenues fall off sharply amid the press by the U.S. to stop betting from its residents. "The legal patchwork that's in place doesn't address today's technology," Sinclair added, noting that domestic groups are also calling on Congress to update the country's gambling laws to account for the growth of the Web.
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Ready To Cash In On Internet Gaming?
Gaming is no longer just for teenagers -- it's entertainment for everyone. The gaming industry is not an exclusive club for large game developers, publishers and console manufacturers. Not any more. You too are invited. The Internet has reinvented gaming, and now gaming is reinventing the Internet. Over the past 10 years, the Internet and gaming industries have enjoyed a symbiotic relationship, feeding each other new ideas and business models.
For instance, MUD (multiuser dungeon) games are not only the precursors of MMORPGs (massively multiplayer online role-playing games) such as "World of Warcraft" and virtual-world or alter-ego games such as "Second Life," but they also embody many elements of a social network.
In the meantime, many new Internet technologies and business models such as e-commerce, micropayments, interactive advertising and subscription-based online entertainment services have found a place in the gaming world. Nowadays it's getting difficult to distinguish a game from a social network and vice versa, and virtual-world games such as Second Life are blurring the lines even further. Since these games are about virtual "realities," anything that happens in the real world can happen in the game.
Better yet, anything that's not ready or appropriate for the real world can also happen in the virtual world. Second Life is therefore not just a game; it's also an advertising and promotional platform, a collaborative environment, an online communication platform, an incubator for new ideas and concepts and a potential platform for digital content distribution (and did I mention a virtual sex playground?). In this brave new world of gaming, the game (and its success or failure) is not just about gameplay and content -- it's also about community and socialization. Granted, there are gamers who prefer to face only the CPU (central processing unit) and never bother to play with or against others; however, the success of several community-based games and gaming services provide ample evidence that many gamers -- when they play games -- are also seeking a communal experience and a sense of belonging.
The subsequent diversification of gaming genres and business models is also leading to the diversification of gamers. The dichotomy of casual versus core gamers is splintering as the gaming industry expands. (There are six segments of gamers.) Time and money are only two of the many dimensions that define a gamer, and an equally if not more important dimension is what motivates a person to play games.
A marketer looking only at time and money spent is missing the bigger picture. Dormant gamers might not be spending lots of money simply because they cannot find any appealing content or services. In the meantime, a leisure gamer who spends a lot of time playing casual games but contributes little money can be better monetized if the right business models exist. Today, power gamers are 10 percent of the total gamer population and generate about 30 percent of the total game content revenue. However, middle-market gamers -- including social, leisure and dormant gamers -- already represent 56 percent of the total market revenue.
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For instance, MUD (multiuser dungeon) games are not only the precursors of MMORPGs (massively multiplayer online role-playing games) such as "World of Warcraft" and virtual-world or alter-ego games such as "Second Life," but they also embody many elements of a social network.
In the meantime, many new Internet technologies and business models such as e-commerce, micropayments, interactive advertising and subscription-based online entertainment services have found a place in the gaming world. Nowadays it's getting difficult to distinguish a game from a social network and vice versa, and virtual-world games such as Second Life are blurring the lines even further. Since these games are about virtual "realities," anything that happens in the real world can happen in the game.
Better yet, anything that's not ready or appropriate for the real world can also happen in the virtual world. Second Life is therefore not just a game; it's also an advertising and promotional platform, a collaborative environment, an online communication platform, an incubator for new ideas and concepts and a potential platform for digital content distribution (and did I mention a virtual sex playground?). In this brave new world of gaming, the game (and its success or failure) is not just about gameplay and content -- it's also about community and socialization. Granted, there are gamers who prefer to face only the CPU (central processing unit) and never bother to play with or against others; however, the success of several community-based games and gaming services provide ample evidence that many gamers -- when they play games -- are also seeking a communal experience and a sense of belonging.
The subsequent diversification of gaming genres and business models is also leading to the diversification of gamers. The dichotomy of casual versus core gamers is splintering as the gaming industry expands. (There are six segments of gamers.) Time and money are only two of the many dimensions that define a gamer, and an equally if not more important dimension is what motivates a person to play games.
A marketer looking only at time and money spent is missing the bigger picture. Dormant gamers might not be spending lots of money simply because they cannot find any appealing content or services. In the meantime, a leisure gamer who spends a lot of time playing casual games but contributes little money can be better monetized if the right business models exist. Today, power gamers are 10 percent of the total gamer population and generate about 30 percent of the total game content revenue. However, middle-market gamers -- including social, leisure and dormant gamers -- already represent 56 percent of the total market revenue.
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Google Leaps Into Boob Tube Ad Biz
Continuing its drive to expand its reach beyond the Web, Google reached a deal to partner with satellite TV provider EchoStar to deliver television spots for its advertising clients. Together, the companies will create what they called the first automated system for buying, selling, distributing and measuring the effectiveness of video ads delivered over EchoStar's Dish Network. Google has also been testing a similar approach with cable provider Astound, which operates in parts of California.
Financial details of the EchoStar deal were not disclosed. The terms give Google access to a portion of the advertising inventory on Dish Network, covering all parts of the day and all commercial channels on the 125-channel network. A First Step Google CEO Eric Schmidt made it clear the search giant considers the partnership the first step in a larger strategy to become a key distributor of TV ads. "Our partnership with EchoStar is important for us as we begin to offer a TV advertising platform broadly," he stated. "We think we can add value to this important medium by delivering more relevant ads to viewers, providing better accountability for advertisers and better monetize inventory for TV operators and programmers." During the initial phase of the service, only advertisers who are invited will be able to take part. "We are confident we will be able to bring increased efficiencies to Dish Network's advertising sales and more accurate, up-to-date viewer measurement with easily accessible online reporting to advertisers," said EchoStar CEO Charlie Ergen.
Google investors hailed the news, driving up the company's stock by more than US$12, or 3 percent, to $471.11 in morning trading Tuesday. For Google, TV is something of a final frontier, a logical next step for a company that has already taken its strong Internet advertising base and extended it to other forms of traditional and new media. Google has unveiled partnerships to deliver print ads to newspapers across the country and has pushed into radio sales, as well.
It also hopes to be a major player in the delivery of advertising to mobile devices and has invested in a firm that delivers marketing messages into interactive video games. With TV ads in the fold, Google may offer advertisers a one-stop shop for a variety of advertising approaches, potentially creating vast new opportunities for delivering and reinforcing branding messages across all of those platforms. EchoStar's Dish Network has about 13.1 million customers in the United States. Many of its subscribers also buy Dish's digital video recording and interactive TV programming, offering the two companies additional opportunities for feedback on ad effectiveness. Google will receive anonymous, aggregated data from EchoStar customers and will use that information to give feedback to advertisers about their campaigns.
That measurement and improvement element is what Google hopes to take from the Web to the TV medium, creating an AdWords-like system for auctioning advertising time the way keywords or placements are now sold -- potentially driving up the revenue received per ad -- and giving advertisers real-time feedback to help them better target their messages. With online advertising worth just under $17 billion last year and TV ads worth as much as $70 billion, the reasons for doing the deal from Google's perspective are even more clear, Sterling Market Intelligence analyst Greg Sterling said. "The motivation here is obvious," he noted. Google is advancing the inevitable in some ways by extending the same level of measurability and accountability common with Web-based advertising methods to other forms of media, Sterling stated.
Google is hoping to become a "kind of dashboard for media buying across platforms," he added, and will likely face resistance from those who fear the company is becoming too powerful in that role. "Whether Google succeeds or fails here will depend on how much ad inventory Google can gain access to and whether it in fact brings greater buying efficiency and targeting than already exists," Sterling concluded. Success will be determined by how willing other media players are to partner with Google, with more such deals needed to reach the critical mass necessary to make it a viable alternative for placing TV ads, Bank of America analyst Brian Pitz said. "Google is clearly moving towards becoming a one-stop shop for purchasing advertising on multiple platforms," he said in a research note.
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Financial details of the EchoStar deal were not disclosed. The terms give Google access to a portion of the advertising inventory on Dish Network, covering all parts of the day and all commercial channels on the 125-channel network. A First Step Google CEO Eric Schmidt made it clear the search giant considers the partnership the first step in a larger strategy to become a key distributor of TV ads. "Our partnership with EchoStar is important for us as we begin to offer a TV advertising platform broadly," he stated. "We think we can add value to this important medium by delivering more relevant ads to viewers, providing better accountability for advertisers and better monetize inventory for TV operators and programmers." During the initial phase of the service, only advertisers who are invited will be able to take part. "We are confident we will be able to bring increased efficiencies to Dish Network's advertising sales and more accurate, up-to-date viewer measurement with easily accessible online reporting to advertisers," said EchoStar CEO Charlie Ergen.
Google investors hailed the news, driving up the company's stock by more than US$12, or 3 percent, to $471.11 in morning trading Tuesday. For Google, TV is something of a final frontier, a logical next step for a company that has already taken its strong Internet advertising base and extended it to other forms of traditional and new media. Google has unveiled partnerships to deliver print ads to newspapers across the country and has pushed into radio sales, as well.
It also hopes to be a major player in the delivery of advertising to mobile devices and has invested in a firm that delivers marketing messages into interactive video games. With TV ads in the fold, Google may offer advertisers a one-stop shop for a variety of advertising approaches, potentially creating vast new opportunities for delivering and reinforcing branding messages across all of those platforms. EchoStar's Dish Network has about 13.1 million customers in the United States. Many of its subscribers also buy Dish's digital video recording and interactive TV programming, offering the two companies additional opportunities for feedback on ad effectiveness. Google will receive anonymous, aggregated data from EchoStar customers and will use that information to give feedback to advertisers about their campaigns.
That measurement and improvement element is what Google hopes to take from the Web to the TV medium, creating an AdWords-like system for auctioning advertising time the way keywords or placements are now sold -- potentially driving up the revenue received per ad -- and giving advertisers real-time feedback to help them better target their messages. With online advertising worth just under $17 billion last year and TV ads worth as much as $70 billion, the reasons for doing the deal from Google's perspective are even more clear, Sterling Market Intelligence analyst Greg Sterling said. "The motivation here is obvious," he noted. Google is advancing the inevitable in some ways by extending the same level of measurability and accountability common with Web-based advertising methods to other forms of media, Sterling stated.
Google is hoping to become a "kind of dashboard for media buying across platforms," he added, and will likely face resistance from those who fear the company is becoming too powerful in that role. "Whether Google succeeds or fails here will depend on how much ad inventory Google can gain access to and whether it in fact brings greater buying efficiency and targeting than already exists," Sterling concluded. Success will be determined by how willing other media players are to partner with Google, with more such deals needed to reach the critical mass necessary to make it a viable alternative for placing TV ads, Bank of America analyst Brian Pitz said. "Google is clearly moving towards becoming a one-stop shop for purchasing advertising on multiple platforms," he said in a research note.
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