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March 15, 2005
Cell Phone Perks Making
Market Waves
By Catherine Pickavet
In
five years, cell phone ringtones and games
revenue will largely contribute to the mobile
phone market, although the multimedia segment
will only comprise a sliver of carriers'
overall returns.
"Wireless Market Forecast, 2004 to
2009," out today from JupiterResearch,
reports that by 2009, ringtone revenues
will reach $724 million, a 234 percent increase
over the $217 million that the market reaped
in 2004. Game players are forecast to pay
$430 million in 2009 for the miniature entertainment,
a 497 percent increase from the $72 million
paid in 2004.
However, according to the report, the mobile
perks accounted for only 10 percent of carriers'
non-access data in 2004. And overall mobile
phone services revenues, which include messaging
services in addition to the games and rings,
remain in the single digits.
While ringtones and games have enjoyed high
market penetration, the handsets capable
of handling the services have not. But despite
the overall low returns, the report believes
the numbers give carriers something to look
forward to.
"During the next five years, the mix
of data services will evolve, but messaging
will still account for 65 percent of non-voice,
non-data access revenues," said Julie
Ask, research director at JupiterResearch.
Though ringtones have a leg up in popularity
right now, the report said, the increase
in popularity of wallpaper, games, and content
will add to the diversity of carriers' premium
content revenue.
Jupiter Research and this publication share
the same parent company.
March 25, 2005
Is eBay Past Its Peak?
By Tim Gray
As
eBay (Quote, Chart) prepares to celebrate
its 10th anniversary, the Internet giant
is having perhaps its roughest stretch since
the company founder launched the site as
a way to help his wife trade Pez dispensers.
For several months now, eBay sellers have
aired a laundry list of complaints, from
an increase in fraud to the reduced number
of bidders and lower selling prices to poor
service from eBay. And on Jan. 19, eBay
announced it had failed to meet analyst
expectations for the fourth quarter of 2004.
The stock fell 19 percent.
Although no one has been foolish enough
to suggest the company, which has grown
gross merchandise volume from $5.2 billion
in 2000 to $34.2 billion in 2004, is headed
for Chapter 11, customer service and pricing
issues might be driving users into the arms
of other auction sites.
"I know that I'm not using it as much
as I used to," Marshall E. said. Marshall,
a registered eBay member since 1999 who
feared the company would suspend his eBay
privileges if his last name was used, claims
a "chasm" is building between
loyal users and the San Jose-based company.
"I've had a lot of problems with the
way they are doing business, but I never
get any response from them," he said.
The chasm appears to have widened in January,
when the company raised its fees for the
fifth time in as many years. The price hikes
kicked off a flurry of complaints that has
led to a near revolt. Message boards on
the site and across the Internet quickly
filled with disgruntled users who felt they
were paying more and getting less. Some
longtime eBay enthusiasts even began shopping
around for another auction site.
There's also pushback from operators of
eBay stores. There are an estimated quarter
million store fronts on eBay, many of which
produce the biggest fees for the company.
Any rift with them could have an immediate
effect on the bottom line.
These store operators are charged a monthly
fee $15.95, raised last month from $9.95.
In addition, as of Feb. 18, store owners
pay eBay an 8 percent commission on each
sale, up from 5.25 percent.
Michelle A., who also asked her last name
not be used, has been selling on eBay since
1998 and more recently opened a store-front
on the site.
"It has become hard to keep up,"
Michelle said. "It is not so much that
I have to pay these increases, it is more
that I don't feel I'm getting anything back
for it."
Michelle was one of more than 24,000 people
who signed a petition protesting the new
fees that was circulated on PowerSellersUnite.com,
a site operated by former eBay sellers.
PowerSellersUnite.com claims that more than
7,000 eBay stores have shut down since the
company announced the fee hike.
Joseph T. Sinclair, the author of several
books about eBay and ecommerce including
eBay the Smart Way, said although increasing
fees are making the service less attractive
for individual sellers or those with only
a few items to sell, the end to its dominance
in the online marketplace is far from certain.
"Individual sellers who do a large
volume of business would have a hard time
making the same amount of money someplace
else," Sinclair wrote in an e-mail.
EBay has an advantage over Internet retailers
like Amazon.com (Quote, Chart), which generates
twice the revenue of eBay, Sinclair pointed
out. Although the revenue gulf between the
two companies is vast, Amazon has traditional
needs more often associated with brick-and-mortar
variety businesses. Most important, it must
maintain and operate warehouses throughout
the world. eBay has no need for such space,
because it doesn't sell any tangible product.
As a result, eBay is nearly three times
more profitable than Amazon.
Many analysts and experts like Sinclair
argue that eBay is a maturing company whose
growth has to slow at some point, following
the normal business cycle of any successful
company.
Indeed, eBay's numbers appear to have peaked.
Gross merchandise volume, which is the total
value of all successfully closed listings
on eBay's trading platforms, hit a record
$34.2 billion in 2004, a 44 percent year-over-year
increase from the $23.8 billion reported
in the full year 2003. In 2000 that number
was $5.2 billion.
Whether the company is maturing or heading
for a decline, it is undeniable that a growing
segment of its users are becoming disenchanted
with the service. A recent University of
Michigan survey showed just that: EBay's
user satisfaction declined 4.7 percent in
2004.
"It is not the same, but really, where
else is there to go?" Michelle asked.
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