eBay 2008 Annual Report Download - page 47

or other entertainment websites may decrease the amount of time users spend on our websites, which could
adversely affect our financial results.
Our failure to cost-effectively manage certain aspects of our business could harm us.
We have expanded our headcount, facilities, and infrastructure in the U.S. and internationally, and anticipate
that further expansion in certain areas will be required as we continue to expand into new lines of business and
geographic areas. This expansion has placed, and we expect it will continue to place, a significant strain on our
management, operational, and financial resources. The areas that are put under strain by our growth include the
following:
•Website Usability. User activity rates on our websites depend in part on the quality of our users’
experiences on those sites. The rapid growth in the number and complexity of products and features on
our sites has occasionally caused users to become confused or overwhelmed or has otherwise impaired
users’ experiences on those sites. We are in the process of making numerous improvements to our eBay
websites, including an attempt to improve the user experience on those websites. These attempts at
improvement could fail, or could decrease activity among users who had grown used to or preferred the
existing experience on our sites. Any impairment of customer satisfaction as a result of site usability issues
could lead to a loss of customers or impair our ability to add customers, either of which would harm our
business.
•Website Stability. We must constantly add new hardware, update software and add new engineering
personnel to accommodate the increased use of our and our subsidiaries’ websites and the new products and
features we regularly introduce. This upgrade process is expensive, and the increased complexity of our
websites and the need to support multiple platforms as our portfolio of brands grows increases the cost of
additional enhancements. Failure to upgrade our technology, features, transaction processing systems,
security infrastructure, or network infrastructure to accommodate increased traffic or transaction volume
could harm our business. Adverse consequences could include unanticipated system disruptions, slower
response times, degradation in levels of customer support, impaired quality of users’ experiences of our
services, impaired quality of services for third-party application developers using our externally accessible
Application Programming Interface, or API, and delays in reporting accurate financial information. We may
be unable to effectively upgrade and expand our systems in a timely manner or smoothly integrate any newly
developed or purchased technologies or businesses with our existing systems, and any failure to do so could
result in problems on our sites. Further, steps to increase the reliability and redundancy of our systems are
expensive, reduce our margins, and may not be successful in reducing the frequency or duration of
unscheduled downtime.
•Customer Account Billing. Our revenues depend on prompt and accurate billing processes. Our failure to
grow our transaction-processing capabilities to accommodate the increasing number of transactions that
must be billed on any of our websites would harm our business and our ability to collect revenue.
•Customer Support. We seek to become more efficient in providing our customer support operations. We
intend to provide an increased level of support (including an increasing amount of telephone support) in a
cost-effective manner. If we are unable to provide customer support in a cost-effective manner, users of our
websites may have negative experiences, current and future revenues could suffer, our costs may increase
and our operating margins may decrease.
We must continue to effectively hire, train, and manage new employees. If our new hires perform poorly, if we
are unsuccessful in hiring, training, managing, and integrating these new employees, or if we are not successful in
retaining our existing employees, our business may be harmed. To manage the expected growth of our operations
and personnel, we will need to improve our transaction processing, operational and financial systems, procedures,
and controls. This is a special challenge as we acquire new operations with different systems. Our current and
planned personnel, systems, procedures, and controls may not be adequate to support our future operations. Any
capital investments that we may make will increase our cost base, which will make it more difficult for us to offset
any future revenue shortfalls by expense reductions in the short term.
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