eBay 2009 Annual Report Download - page 51

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 for some of our businesses. 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 cost effectively upgrade our technology, features,
transaction processing systems, security infrastructure, or network infrastructure to accommodate
increased traffic or transaction volume or changes to our site functionality 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 APIs
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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