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eBay, InPhonic Roll Out SMS Bidding

NEW YORK -- Wireless software firm InPhonic has scored a potentially lucrative deal to power fee-based SMS alerts and re-bidding services for e-commerce darling eBay .

The deal, which targets the early-adopter crowd among eBay's 46 million users, would shuttle SMS alerts to subscribers of the $2.99 per month service. Users tracking a specific auction can use cell phone keypads or voice-activated entries to re-bid on eBay items.

For Washington, D.C.-based InPhonic, the Wireless Rebidding for eBay deal helps to validate its business model of offering add-on wireless services for enterprise customers and, although eBay SMS service is a revenue share transaction, it helps to showcase the company's wireless offerings within the world's largest e-commerce marketplace.

While eBay already offers e-mail and wireless bidding alerts, InPhonic's service is the first time bidders can actually re-bid on an auction and receive text-based alerts on outbids.

To add value and sweeten the pot for subscribers, InPhonic said it would also shuttle news, weather, sports and other content from aggregator YellowBrix as part of the SMS offerings.

InPhonic CEO David Steinberg declined to discuss specifics of the revenue sharing deal, which would see eBay taking a cut of the $2.99 monthly fee for unlimited usage.

During a demonstration for journalists here Wednesday, InPhonic executives raved about the simplicity of the service, which allows subscribers to use a minimum of keypad entries to view an outbid alert and place a rebid on an eBay auction in real time.

While the jury remains out on the potential for wireless e-commerce transactions in the United States, Steinberg touted the "simplicity" of SMS-based services as the driving force behind its adoption.

He conceded the service targets the most avid of eBay users, but insisted a mere 5 to 10 percent penetration rate among eBay's SMS-enabled users would "allow us to survive and do well." He said InPhonic had a patent pending on the use of two-way SMS to allow real-time bidding.

"As a frequent eBay user, I know first-hand how frustrating it can be to be outbid on a one-of-a-kind item without at least one last opportunity to raise your bid. With (this), no eBay user has to feel that frustration again," Steinberg declared.

The Wireless Rebidding for eBay service also works with Internet-enabled cell phones that use the WAP protocol, though it does not require a WAP-enabled phone.

The privately-held InPhonic, which claims profitability, also announced a key promotion deal with wireless carrier Nextel to resell the SMS services to its 9.2 million cell phone subscribers.

Steinberg said partnership deals are being negotiated with all the major U.S telco carriers, which include the likes of AT&T Wireless , Cingular, Voicestream, Nextel and Verizon Wireless .

But, those deals aren't necessary for the eBay SMS service to work. As it is, any user in the U.S with an SMS-enabled phone can subscribe. which was officially launched on Thursday.

InPhonic said the technology hooks into APIs from eBay, using the SOAP protocol. This allows way for applications to communicate with each other over the Internet, independent of platform.

Steinberg said plans are also in place to extend the alerts/rebid service to a Voice XML platform. "We can get the Voice XML portion working in 60 days but it all hinges on when eBay wants to roll that out," he said.