eBay 2002 Annual Report Download - page 14

peak usage of 580 million pageviews per day, 60 million item searches per day, and 4.5 gigabits per second
of data traÇc.
Our platform is designed around industry standard architectures to reduce downtime in the event of
outages or catastrophic occurrences. The eBay service provides 24 hours-a-day, seven days-a-week
availability, subject to a weekly scheduled two hour maintenance period. Substantially all of our system
hardware is hosted at Cable & Wireless and Qwest facilities in the San Jose, California, area and Sprint
Communications facilities in Sacramento, California, each of which provides redundant communications
lines and emergency power backup. These systems and operations are vulnerable to damage or interruption
from earthquakes, Öoods, Ñres, power loss, telecommunication failures and similar events. They are also
subject to break-ins, sabotage and intentional acts of vandalism, and also to potential disruption if the
operators of these facilities have Ñnancial diÇculties.
We do not maintain fully redundant systems or alternative providers of hosting services, and we do
not carry business interruption insurance suÇcient to compensate us for losses that may occur. Despite any
precautions we may take, the occurrence of a natural disaster, or any decision by Cable & Wireless, Sprint
or Qwest to close a facility we are using for Ñnancial reasons without providing us adequate notice or other
unanticipated problems could result in lengthy interruptions in our services. In addition, the failure by
Cable & Wireless, Qwest or Sprint to provide our required data communications capacity could result in
interruptions in our service. Any damage to or failure of our systems could result in interruptions in our
service. Interruptions in our service will reduce our net revenues and proÑts, and our future net revenues
and proÑts will be harmed if our users believe that our system is unreliable.
Our platform consists of Sun database servers running Oracle relational database management
applications with a mix of Sun and Hitachi storage devices along with a suite of Pentium-based Internet
servers running the Windows NT and Linux operating systems. We use F5 Networks, Inc.'s load balancing
systems and our own redundant servers along with select software from Veritas Inc. to provide for fault
tolerance, and we use IBM's WebSphere application server for certain platform functions. These third-
party technology licenses may not continue to be available to us on commercially reasonable terms. The
loss of these technologies could require us to obtain substitute technologies of lower quality or performance
standards or at greater cost.
We have experienced occasional system interruptions, which we believe will continue to occur from
time to time. These outages have stemmed from a variety of causes, including third-party hardware and
software problems, human error, intentional external attacks (denial of service attempts), and eBay
proprietary software issues. The volume of traÇc on our websites and the number of items being listed by
users has been increasing continually, requiring us to expand and upgrade our technology, transaction
processing systems, API capacity, security infrastructure, and network infrastructure and to add new
engineering and operations personnel. The process of upgrading and expansion is part of the regular
maintenance and site revisions. We may be unable to accurately project the rate or timing of increases, if
any, in the use of the eBay service or expand and upgrade our systems and infrastructure to accommodate
these increases in a timely manner. Any failure to expand or upgrade our systems at least as fast as the
growth in demand for capacity could cause the website and API functions to become unstable and possibly
cease to operate for periods of time. Unscheduled downtime would harm our business.
We use internally developed systems to operate our service and for transaction processing, including
billing and collections processing. We have announced our intention to enhance our billing system with
products from CSG Systems. We must continually improve our systems to accommodate the increasing
levels of use of our websites. In addition, we may add new features and functionality to our services that
would result in the need to develop or license additional technologies. The cost of our development eÅorts,
including the required capitalization of certain site-related software and development costs, totaled
$65.3 million in the year ended December 31, 2000, $82.0 million in 2001, and $120.1 million in 2002, and
are reÖected in our Consolidated Financial Statements under the heading ""Product Development.'' Our
inability to add additional software and hardware or to upgrade our technology, transaction processing
systems, security infrastructure, or network infrastructure to accommodate increased traÇc or transaction
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