News : EBay to let outside software work inside its site

By Eric Auchard

FRANKFURT (Reuters) - EBay Inc on Monday unveiled plans to let outside software programs work inside the world's largest e-commerce site, joining a trend toward openness that fueled the popularity of the social network website Facebook.

At the online auction leader's annual conference for software developers in Chicago, eBay is laying out Project Echo, a plan to give independent developers a path to having their software featured within eBay's core site.

The move, which the company plans to begin testing later this year, will allow third-party software programs to work within eBay's Selling Manager, which functions as a central sales management dashboard for 700,000 eBay sellers.

"We are opening up the eBay site to help developers and sellers make more money, which is what this is all about," Max Mancini, eBay's senior director of Platform and Disruptive Innovation, said in an interview.

Across the Web, companies are opening up their software platforms to act as distribution hubs for outsider developers.

Facebook has attracted a vast new audience since it did this a year ago. Outside developers have built 24,000 new applications for the social network.

Salesforce.com Inc has thousands of business software developers contributing their own applications to its Web-based AppExchange, while Apple Inc has begun wooing outside developers to create programs for the iPhone.

"Rather than having eBay try to build every feature, we should open up the platform and integrate others' work," Mancini said. "We have realized that we need to allow sellers and developers to get together a little bit more easily."

In blurring the boundary between what eBay builds itself and what it incorporates from other developers, the company is seeking to benefit from rapid external innovation while rewarding these partners with new ways to make money.

EBay would promote software built by outsiders for purchase by its army of auction sellers, and take a cut of resulting sales. The company would vet programs to ensure they meet site guidelines for trustworthiness, Mancini said.

By incorporating outside programs more directly into eBay.com, developers would gain access to mountains of data that is closely controlled by eBay -- such as available inventory, latest bids and completed sales -- allowing their software to capitalize on these insights into user behavior.

EBay consumers eventually stand to benefit by getting access to a richer range of tools for buying on its auction and online store sites, although the initial focus of Project Echo is on auction sellers, Mancini said.

For sellers, Project Echo could help them manage various aspects of their business within eBay, as well as operations outside the e-commerce site, such as accounting and customer service.

"Our philosophy is to help sellers manage their businesses, not just businesses on eBay," Mancini said. Policies for how open eBay might be to allowing rival e-commerce sites to operate inside it have yet to be settled.

Project Echo builds on a variety of careful steps eBay has taken to encourage independent software programmers to build software that runs on eBay. The company has 70,000 members in its developer program.

Already, a little more than one-quarter of all eBay.com auction listings are the result of some 12,000 software programs built by outside developers. This activity is now typically initiated on other sites, then routed into eBay behind the scenes.

Selected sellers will gain trial access to Project Echo early in the fourth quarter. To prevent potential disruptions during the heavy year-end holiday selling season, wider availability will be delayed until early 2009, Mancini said.

Also on Monday, Stifel Nicolaus analyst Scott Devitt upgraded his investment rating on eBay to "buy," based on recent changes the company made to tighten up sales procedures and make it easier for buyers to find products for sale.

"EBay is forcing sellers to treat buyers better," Devitt wrote in a research note. "(It) is making positive progress in its efforts to increase trust on the site."

But Deutsche Bank analyst Jeetil Patel has advised investors sell the stock, arguing, in part, that eBay faces intense competition from Amazon.com Inc to keep merchants active on multiple sales channels, not just on eBay.

(Editing by John Wallace)