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Glitches gnaw at online biz
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May 19, 1999: 3:11 p.m. ET
Study finds E*Trade's growing pains felt by other e-commerce firms, too
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NEW YORK (CNNfn) - Booming business could spell big time trouble for e-commerce companies unable to meet customer demand, according to a report released Wednesday.
International Data Corp. of Framingham, Mass., cited the growth and related problems that online brokerage E*Trade Group Inc. (EGRP) has been experiencing.
While E*Trade may be adding customers and rolling out new services, the Palo Alto, Calif.-based brokerage's technology appears ill-prepared to handle the massive increase in customers, the report said.
An E*Trade spokesman said the brokerage is a leader in addressing site problems.
Paul Johnson, senior research analyst with IDC's Internet and eCommerce Strategies program, said "too much growth can lead to serious growing pains."
Johnson stressed that E*Trade isn't alone in suffering cyber-aches, as its problems mirror difficulties many e-commerce sites face.
Johnson said many companies build e-commerce sites by piecing together technology from a variety of software, hardware and networking vendors, a piecemeal approach that contributes to many problems.
IDC's study said that the backbone of E*Trade's online operations is its patent-pending Stateless Architecture, which enables more than 1 million visitors to use the site simultaneously and up to 150,000 customers to place orders at the same time.
"Once we got down into the technology," Johnson said, "it was actually kind of scary. They made a lot of correct decisions and still ran into so many problems."
Johnson said most of E*Trade's problems stem from a period in February when the site suffered service interruptions on different occasions on three different days. He added that Charles Schwab Corp. (SCH) also has been hit by site crashes.
E*Trade spokesman Dave Murray said the brokerage learned from the February experiences and has implemented changes.
"We are out in front of the industry in terms of building our capacity and building our ability to take care of the tremendous market demand," Murray said.
E*Trade was up 3-13/32 at 114-7/16 in recent trading. 
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