eBay - Staying Online - Always|IT and Systems|Case Study|Case Studies

eBay - Staying Online - Always

            
 
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Case Details:

Case Code : ITSY015
Case Length : 08 Pages
Period : 1995-2001
Pub Date : 2002
Teaching Note : Available
Organization : eBay
Industry : Information Technology Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"eBay's persistent site failures stem from a lack of coordinated IT planning and a centralized database and storage structure that creates a single point of failure."

- Internetweek.com, January 11, 2001.

The Problems

In January 2001, eBay, the largest online auctioneer in the world, saw a major outage of its website, which lasted 11 hours. Company sources blamed the mishap on some problems with the storage hardware and database software. eBay CEO, Meg Whitman, blamed both the primary and backup infrastructure of the website.

To add to the company's problems, it had to delay replacing some of its hardware due to the busy holiday season. The outage led to significant financial problems for eBay.

The company had to extend pending auctions by 24 hours and refund the fees paid for all auctions that were scheduled to end during the outage period.

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According to an analyst1, the outage cost eBay $450,000 in lost service fees - about 0.3% of its total revenue for the first quarter of 2001. The next day, eBay's stock went down by 8.85% to $35 7/8.

This was not the first instance of eBay's outage. The company had seen 15 similar outages between August 1998 and November 1999, including a major one in June 1999 that made the site inaccessible for 22 hours.

During the two-day outage, eBay's stock came down from $182 to $135 reducing its market capitalization by $5.7 billion. The outage was prolonged as database files became corrupted and files had to be rebuilt before the system could be brought online.

Experts said that eBay had failed to build a redundant storage hardware and scalable web architecture.

Excerpts >>

1]  Deutsche Banc Alex Brown analyst Jeetil Patel.






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