The bounce ends years of erosion in hostnames and market share for NSI. As recently as January, Network Solutions was at the bottom of the performance charts, placing 1,501st out of 1,503 providers tracked, with a monthly loss of 25K hostnames.
The recovery culminates a two-year turnaround effort at NSI, according to Network Solutions President Champ Mitchell. "It's fair to say that the Network Solutions of several years ago gave terrible customer service and was hated by its customers," said Mitchell. "We've reinvented the company and our customer experience. It's a complete reversal from where we were."
NSI's recovery seems an unlikely one, given Network Solutions' pricing of $34.99 for a one-year domain registration, more than four times the asking price of some discount domain sellers. Mitchell says NSI has become a safe haven for small business owners launching web sites, who are willing to pay more for a familiar brand name. "We increasingly focus on a small business market that needs help emerging online," said Mitchell. "The real growth is among people who have one or two domains."
Mitchell says many are "eager but anxious" business owners, who are likely unfamiliar with many low-priced domain sellers. "Our customer base is people who place a high value on stability and reliability," said Mitchell. "We are the premium provider in this market. And when you're talking about your web presence, a $20 difference isn't a lot of money."
Network Solutions was founded in 1979 as a joint venture with the National Science Foundation and AT&T. In 1993 the company was awarded the exclusive contract to register domain names when the NSF outsourced the job. Two years later Network Solutions was bought by Science Applications International Corporation (SAIC), which took it public in 1997. In March 2000, SAIC sold Network Solutions to VeriSign for a reported $15.3 billion stock.
After years as a monopoly, Network Solutions stumbled when the domain registration market was opened to competition, and by the time Mitchell arrived in mid-2001, its entire customer service operation was badly busted. Average wait times on service calls were an hour. As a result, NSI's domain renewal rate plunged to 30 percent as customers moved to cheaper and more user-friendly competitors.
NSI went to work on its customer support, overhauling its web site so it "actually worked," according to Mitchell. The Network Solutions brand, once subsumed by VeriSign, was relaunched in early 2003 along with the new web site. That re-established a familiar brand, but also made it easier for VeriSign to sell off NSI, which it did in October of last year. The new owner is Phoenix-based investment firm Pivotal Private Equity, which paid $100 million for a controlling 85% stake in Network Solutions.
By then, improvement in customer service had helped NSI lift its renewal rate to 54 percent. Its current customer base includes about 4 million individuals and small businesses and 550,000 enterprises, according to Mitchell. While he wouldn't say much about NSI's plans, they're not jumping into the pricing wars anytime soon. "It's true that there are many providers who offer domains at $8 or $10," said Mitchell. "They draw a lot of speculators, and our view is that they're welcome to them."