Half.com has already exceeded its half life, eBay says

After operating for more than three years as a fixed-price discount retail site once thought to be a competitive threat to Amazon.com, Half.com will cease to operate as a distinct web site by the end of next year, when it will be completely folded into eBay.com, a spokesman for parent eBay Inc. says. Although Half.com made a significant contribution to the growth of eBay`s overall $1.2 billion sales in books, CDs and videos, it became overshadowed by the success of eBay itself, analysts say.

"EBay`s own success torpedoed Half.com, because it became easier for buyers and sellers to just deal with eBay," says David Kathman, a stock analyst with investment research firm Morningstar Inc.

Half`s founder and president, Josh Kopelman, who also served as eBay`s vice president of media products, will leave the company on April 15. He`ll be replaced by Mike Aufricht, currently head of marketing at AvantGo Inc., a provider of mobile enterprise software.

Half.com, founded in 1999, specializes in channeling person-to-person sales of books, music CDs and videos. Although in recent years Half has also dealt with a broader range of products, including sporting goods, jewelry and consumer electronics, its strength remained with media products, the eBay spokesman says. He adds that Half accounts for the fastest growing segment of eBay`s overall media products category, which grew 75% in 2002 over 2001 to hit $1.2 billion.

EBay acquired Half.com in July 2000 for $241 million in stock, seeking its expertise in online payments and electronic product catalogs as well as its fixed-price system. But now that eBay has incorporated Half`s expertise into its system, the extra value Half brings to buyers and sellers has diminished, the spokesman says.

When Half began operating in 1999, it introduced technology to figure prices of goods marked at about half the original list price. The system requires sellers to enter a UPC code or other identifying number into an electronic web-based form, along with other information on the product`s condition, to set a price considered about half the original list price. But the value of that service is now in question. "It was in a lot of demand, but quickly reached a plateau," Kathman says.

The eBay spokesman says eBay will review whether it wants to keep the Half.com pricing system. "It`s one of the issues to be worked out," he says. "It has a lot of pluses, but sellers are now looking for more options when it comes to selling merchandise, such as using photos and posting reviews to describe an item."

He declines to provide more details on Half`s gross sales or its number of product listings and registered users. In April 2001, when Half expanded into the additional categories of consumer electronics, computer equipment, sporting goods and trading cards, it reporting having 15 million item listings.

Kathman says eBay has declined in meetings with analysts to divulge details about Half, indicating that it was an immaterial part of its overall business. For 2002, eBay reported about 600 million listed items.