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eBay makes move for fixed-price future

More than a year after acquiring Half.com, the online auction powerhouse announces that it is folding much of the company's operations into its own.

More than a year after acquiring Half.com, eBay announced Tuesday that it is folding much of the company's operations into its own--a signal that the auction powerhouse is committed to also offering fixed-priced goods.

Half.com has led eBay's expansion into fixed-priced goods, where analysts say that eBay could challenge Web retailers such as Amazon.com.

The person-to-person, fixed-price marketplace will move its technical, general administration and customer service departments to eBay's San Jose, Calif., and Salt Lake City facilities, said Josh Kopelman, Half.com's chief executive.

The plan also calls for Philadelphia-based Half.com to lay off 18 employees, or about 13 percent of the company's staff.

Half.com has operated as a separate business unit since eBay acquired it. eBay said at the time that it would eventually absorb Half.com's operations entirely and do away with the Half.com name, Kopelman said.

eBay's foray into fixed-price sales is a reaction to pressure from Wall Street to expand its business. While eBay has won the auction wars and clearly dominates the sector, the company is turning its attention to developing a generation of Web storefronts--online outlets where new products can be offered at fixed prices that are often heavily discounted.

"Acquiring Half.com (was) one of the key moves that allowed them to vault into a fixed-priced business," said Jeetil Patel, a financial analyst for Deutsche Banc Alex Brown. "It's a direct marketing opportunity to the kind of audience that Half.com addresses. Half.com has gone from 4 million items listed on its site to more than 50 million today.

The rivalry between Amazon and eBay heated up last week when Amazon filed suit against one of its former executives who had jumped to eBay. Amazon asserts Christopher Zyda, Amazon's former international chief financial officer, revealed company secrets to a "direct competitor," violating confidentiality agreements he made at Amazon.

Zyda said he didn't agree to any such thing and that he would not betray any of Amazon's secrets.

Executives at eBay seemed to ignite passions by saying that the company intended to challenge Amazon in the music, books and video categories--Amazon's bread-and-butter products.

As part of the integration plan, Half.com will merge its reader feedback area with eBay. Half.com users will also be able to use their passwords to enter eBay.