Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : eBay - Superb Internet Business Model -- Ignore unavailable to you. Want to Upgrade?

To: Doug Fowler who wrote (3092)	4/30/1999 2:45:00 PM
From: JF2155	Respond to of 7772

Doug -- I got out of EBAY near the opening today after thinking of that maybe that Colorado kid murder did buy stuff off EBAY. Will get back in when the smoke clears. Good luck long JIM

To: Doug Fowler who wrote (3092)	5/2/1999 11:05:00 PM
From: Stewart Elliot	Read Replies (2) \| Respond to of 7772

>> I'm not sure why you think the Butterfield acquisition will have a significant negative impact on margins. Perhaps you can elaborate. << Butterfield's margins are undoubtedly much lower than ebay's - it wouldn't surprise me if Butterfield increases ebay's labor expense base by 50% or more and shaves several points off ebay's overall margins (where 3-5pts can be considered "significant"). I'd like to emphasize this part alot less than my main thesis which is ebay will be forced to add value (perhaps thru similar acquisitions), and/or lower prices if real competition comes into play. If the auction market becomes competitive, ebay will be forced to respond to marketing initiatives launched by other major players. >> As far there being "no free lunch in a competitive market": Microsoft's margins and profits have improved during the past several years, and .... Now, one might argue whether Microsoft is actually in a competitive market. they have been around for 20+ years now. << I've actually mentioned MS in a previous message - MS is in a class to itself. Plain and simple: MS is not in a competitive market and the barriers to entry are so enormous that no company could afford taking them on. The only valid example is one where a company is not a monopoly yet is immune to normal market pressures to add value and/or lower prices. Ebay dominates, but is not a monopoly (that could change, but clearly the market is too new to declare victory) If I paid $500 to each ebay user to switch to Amazon and never go back, how many do you think would take it? I would guess that at least 30% would take the bait (most users do not fall into your category). Now, do the same to each microsoft windows user - $500 to switch to Linux and never go back. I would guess that less than 1% would take the money - despite all the hype around linux. The example merely illustrates the difference between MS and EBAY users - one is bound, locked and really has no where to go. EBAY users can switch easily given the right incentive: for now, ebay is the only company with adequate selection, but has no monopoly. This will especially be true if another site or 2 get critical mass - for now, it's easy to say ebay has the potential to become the most powerful company in the world.