On September 6, IBM and eBay jointly announced that the two companies have forged an alliance on three fronts. First, IBM landed a public software coup when eBay selected WebSphere as its next-generation trading platform. Second, IBM will expand its presence on eBay, making the trading site a new sales channel. Third, both companies will explore joint marketing opportunities in online and offline media.

What Does It All Mean?
For anyone interested in marketing, IBM and eBay stand to profit from this alliance in several ways. The "eight-bar logo" is always a great trump card to throw around. Now there will be a lot more stuff to buy/sell on eBay, which drives even more traffic to one of the busiest sites on the Internet. The deal is also good for IBM because it has found a place to market its hardware and software, which are now experiencing explosive growth. Seventy percent of eBay members are potential new buyers of IBM products. Considering that most of IBM's effort is spent in the government, institutional, and corporate arenas, IBM will now tap into vast numbers of small business/consumer shoppers through eBay.

This announcement is exciting for the WebSphere world for its technology component. In the words of Lou D'Ambrosio, vice president of marketing and sales of IBM Software Group, "eBay is the proof point of success on the Internet." It is a tremendous vehicle to showcase WebSphere. Not only does IBM get a commitment from an industry leader, but eBay also announced that WebSphere beat WebLogic in a three-month benchmark test.

eBay Today
Since its inception in 1995, eBay has offered an e-marketplace for users to buy and sell a wide variety of merchandise. It has grown rapidly and expanded to enable trade on a local, national, and international basis in the auction-style and fixed-price formats.

In 2000, eBay exceeded more than $5 billion in gross merchandise sales in more than 4,500 product categories. On any given day, eBay plays broker to millions of items for sale, with nearly 600,000 new items appearing daily.

eBay gets more than 4 million page views per month. In September 2000, its daily reach topped 16.2%, the number of unique visitors on an average daily basis was 2.1 million, and the average usage minutes per month by individuals was 119.6 minutes, according to Media Metrix, a leading Web audience measurement company.

The eBay experience, as it is known today, is based on internally developed proprietary software. The eBay system facilitates the sale process using e-mail. Users are notified via e-mail when they initially register for the service, when they place a successful bid, are outbid, place an item for sale, and when an auction ends. The system sends daily updates to active sellers and bidders regarding the status of their current auctions.

Additionally, the system maintains user registration information, billing accounts, current auctions, and historical listings. All information is regularly archived for record-keeping and analysis purposes. The system regularly updates a text-based search engine with the titles and descriptions of new items, as well as pricing and bidding updates for active items.

A seller's account is maintained and updated every time an item is listed or an auction closes with a bid in excess of the seller-specified minimum. The system sends electronic invoices to all sellers via e-mail on a monthly basis.

In addition, the eBay service also supports a number of community bulletin boards and chat areas where users and eBay customer-support personnel can interact.

eBay's system consists of Sun database servers running Oracle relational database management systems with a mix of Sun and Hitachi storage and a suite of Pentium-based Internet servers running the Windows NT operating system. eBay uses Resonate Inc.'s load-balancing systems and its own redundant servers to provide for fault tolerance.

For the year 2000, eBay spent $55.9 million on product development and continued its strong commitment to increasing and enhancing the user's experience.

The company wanted to assess where it was and chart a course for the future. Chuck Geiger, vice president of technology strategy at eBay, explained, "There were several factors that required us to take a systemic look at the entire business. We stopped, took a breather, and asked the question: 'If we were to do it today, how would we do it?' The solution required a different approach using a three-tier architecture to expand the business horizontally and vertically using open standards, particularly J2EE." eBay's goal is to continue a high level of service and meet the service demand as it continues to evolve.

It was quickly apparent that the way to go was with an Application Server Architecture. Geiger's mission was to make the system flexible and expandable and to increase developer productivity. He looked for a solution that could track records, handle high volume transaction processing, and wasn't hardware dependent. WebSphere 4.0 was one of three finalists in a three-month competition running an eBay prototype. The test had its focus in the current eBay "listing" and "viewing" of products.

The contestants were benchmarked for sessions, threads, and EJB performance exponentially, and for horizontal and vertical scalability. The test was conducted on Sun and Intel hardware, clustered and nonclustered. Under consideration were flexibility, available platforms, scalability, development productivity, and time to market.

The Outcome
Geiger announced that WebSphere 4.0 successfully beat BEA's WebLogic in a cost/benefit analysis. That analysis considered the general cost per transaction as derived from the total cost of hardware, OS, software, and development productivity as it relates to time-to-market.

WebSphere will be the cornerstone of eBay's next-generation architecture, internally known as V3. Deployment will begin in the fourth quarter and is expected to continue into 2003. Global Services will be on-site for a skills transfer and to help with the J2EE architecture.

"I want IBM to teach us to fish, not fish for us," Geiger continues, "eBay is still very much in control of its technological destiny."

WebSphere offers the promise of flexibility through its use of open standards. Scott Hebner, director of marketing for WebSphere Software, confirmed that WebSphere's strength is found in its open J2EE, XML, and Web services standards, allowing it to be the platform of choice for system integration. eBay's content changes regularly so expectations are high that WebSphere will increase and enhance development productivity. It certainly appears that WebSphere's integrated aspects - development, personalization, and transcoding - lend themselves to eBay's business model.

Stefan Van Overtveldt, program director for IBM's WebSphere Technical Marketing, summarized, "eBay had reached a successful point and knew they had to expand. They realized they had to get away from proprietary technology and go to an open-standard platform. This confirms that WebSphere is very viable at the middleware level." He continued, "IBM knew WebSphere is high performing and stable. Now a world-class Internet player with extremely high volumes has concluded WebSphere is best."

The deal with eBay will generate a lot of interest in WebSphere from other companies. And because WebSphere is based on open standards there are a large number of possibilities for future applications to be designed and developed to run off the WebSphere technology.