eBay 2007 Annual Report Download - page 20

of Skype’s business: existing telephony products and new ecommerce opportunities. Part of our strategy to acquire
new users is to achieve a desktop presence. In order to do this, we have partnered with certain computer
manufacturers to include Skype software in their new computers.
Existing Internet Communications (VoIP) Products
Our strategy for driving growth from existing Internet communications (VoIP) products relies on acquiring
new users and developing better products and innovative new features. In 2007, we launched a new global pricing
structure that gives users an easy-to-understand all-in-one Skype package. This package offers a simple, convenient
and cost-effective way for consumers worldwide to call landlines and mobile phones over the Internet.
To continue growing the number of Skype users and improving the Skype experience, we will continue to work
with our partners to develop and introduce new Skype Certified devices, including telephones and accessories,
many of which eliminate the need for a computer to make Skype calls over the Internet. In 2007, Skype and 3, a
mobile phone operator, launched a 3G Internet phone that allows users to make free Skype-to-Skype calls and send
free Skype instant messages with the push of a button from their mobile phone to other Skype users no matter where
they are.
In addition to working with our partners, we will continue to make Skype Certified products available directly
to our users through Skype’s Internet store as well as through other retail channels.
New Ecommerce Opportunities
We plan on expanding Skype’s presence within our existing businesses because communication via email —
the traditional way for buyers and sellers to communicate — can be a source of friction in the online shopping
experience, due primarily to delays in response time. Skype enables us to create new channels for ecommerce
activity that help to streamline the online shopping experience. Communication via Skype allows buyers and sellers
to benefit from being able to communicate directly with each other in an instantaneous and private environment.
Skype also offers Skype Prime, which creates a marketplace for users to share their knowledge, talent, skills and
services with other users.
Other Items
Employees
As of December 31, 2007, eBay Inc. and its subsidiaries employed approximately 15,500 people (including
temporary employees), approximately 9,500 of whom were located in the U.S.
Competition
We encounter vigorous competition in our businesses from numerous sources. Our users can find, buy, sell and
pay for similar items through a variety of competing channels. These include, but are not limited to, online and
offline retailers, distributors, liquidators, import and export companies, online and offline auctioneers, catalog and
mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and
offline commerce participants (consumer-to-consumer, business-to-consumer and business-to-business), online
and offline shopping channels and networks. As our product offerings continue to broaden into new categories of
items and new commerce formats, we expect to face additional competition from other online and offline channels
for those new offerings. We also compete on the basis of price, product selection, and services. Our growth rates in
our most mature markets have significantly slowed and we are losing market share in some segments. For our
Payments segment, our users may choose to pay through a variety of alternative means, including other online
payment services, offline payment methods such as cash, check or money order, and traditional online or offline
credit card merchant accounts. For our Communications segment, our users may choose to use their local telephone
companies, cable providers and other VoIP providers. To compete effectively, we may need to expend significant
resources in technology and marketing. These efforts may be expensive and could reduce our margins and have a
materially adverse effect on our business, financial position, operating results and cash flows and reduce the trading
price of our stock. We believe that we will be able to maintain profitability by preserving and expanding the
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