eBay 2005 Annual Report Download - page 14

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primary source of revenue, provide Skype's users with low-cost connectivity to traditional fixed-line and mobile
telephones. Skype currently offers its software in 23 different languages.
Communications Strategy and Offerings
Skype offers high-quality voice communications to anyone with an Internet connection anywhere in the
world. The Skype software is easy to download and install, and enables free VoIP calls between Skype users
online. Skype's software also offers a robust set of features, including voicemail, instant messaging, call
forwarding, conference calling and Skype video.
At the core of our Communications business is the ability to communicate with buyers and sellers over
the Internet. Communication via e-mail, the traditional way for buyers and sellers to communicate, can cause
friction in the online shopping experience, caused primarily by delays in response time. We believe that Skype
will enable eBay to create new potential channels to monetize e-commerce activity and that it can reduce
friction in the online shopping experience. Communication via Skype allows buyers and sellers in highly
involved, expensive or complex categories of goods or services, to benefit from being able to communicate
directly with each other in an instantaneous and private environment. For Skype's fee-based offerings, users
can utilize PayPal, which allows for efficient online payments and increased growth in users for PayPal as well.
As of December 31, 2005, Skype had 75 million members in 225 countries and territories. Skype is
considered a market leader in VoIP offerings in virtually all countries in which it does business.
Technology
eBay Platform
The eBay platform is composed of a scalable transaction processing system, consumer user interface, and
externally accessible Application Programming Interface, or API, for third-party integrations. The scalable
system is primarily based on internally developed proprietary software, but also includes selected vendor
components. The eBay platform supports the full selling and buying processes, including initial registration for
the service, placing bids and managing outbids, listing items for sale, and transaction close. The eBay platform
also manages various notifications for sellers and buyers, including daily status updates, bid and outbid notices,
registration confirmations, account change notices, billing notices, and end-of-auction notices. The platform
maintains user registration information, billing accounts, current item listings and historical listings. All
information is regularly archived for record-keeping and analysis purposes. The platform regularly updates a
comprehensive search engine with the titles and descriptions of items, as well as pricing and bidding updates
for active items. The platform also updates the seller's billing account every time an item is listed, a feature is
selected, or an auction closes with a bid in excess of the seller-specified minimum bid. The platform sends
electronic invoices to all sellers at least monthly. In addition to these features, the eBay service supports a
community bulletin board and chat areas where users and eBay customer support personnel can interact.
Our eBay 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' load balancing systems
and our own redundant servers along with select software from Symantec to provide for fault tolerance, and we
use IBM's WebSphere application server for certain platform functions. We must continually improve our
systems to accommodate the increasing levels of use of our websites. In addition, we may need to develop or
license additional technology in order to add new features and functionality to our services. If we are unable to
upgrade or effectively integrate our technology, transaction processing systems, security infrastructure, or
network infrastructure to accommodate increased traffic or transaction volume our business could be harmed.
For more information regarding these risks, see the information in Item 1A under ""Risk Factors Ì Our failure
to manage growth could harm our business.''
Our competitive space is characterized by rapidly changing technology, evolving industry standards,
frequent new service and product announcements, introductions and enhancements and changing customer
demands. Accordingly, our future success will depend on our ability to adapt to rapidly changing technologies
10