With 304,000 active sites and 600,000 hostnames, Yahoo is already a major player in small business hosting, with its turnkey online stores proving popular with e-commerce beginners. It previously sold domains for $35, adopting lower pricing in late June on a trial basis. It will continue to work with wholesale domain provider Melbourne IT.
"We think domains are an important on-ramp to the (small business) market," said Rich Riley, the vice president and general manager of Yahoo Small Business. "In looking at the domain market, we realized there was a great opportunity to increase our market share in this important sector."
A record 4.7 million domain names were registered in the first quarter of 2004, suggesting to many industry observers that small businesses without an Internet presence are finally starting to come online. Riley says Yahoo views domains and hosting as more than add-ons to its portal-driven advertising revenue. "We're focused on being the leader in this product," said Riley. "We're the only major branded provider in the space, and we want to offer the best value as well."
Yahoo sees its name recognition as a powerful advantage. Among domain registrars, Network Solutions and Register.com have perhaps the best brand awareness, but are at the upper end of the price range at $35. Go Daddy and eNom are currently the fastest-growing domain sellers, but generate much of their sales through reseller networks, and have better recognition within the industry than with the general public. 1&1 Internet, the price leader among large providers at $5.99 a year, has been a huge success in Europe, and entered the U.S. market in January.
The millions of U.S. small business without web sites have loomed large in the ambitions of hosting providers, but have been slow in embracing the Internet. Riley says the barriers to entry for small businesses are lower than ever, especially with domains. "We definitely think there are a lot of first-time buyers out there," he said. "As recently as two years ago, (buying a domain) was expensive and designed for a technically savvy user. If you were a late-adopter small business, it was intimidating. Now you can get a domain from a brand you trust, plus it's more affordable."
With the expanded storage accompanying its shared hosting accounts, Yahoo is hoping to also house the web sites for domains it registers. The monthly bandwidth allotment (25 gigabytes) and e-mail accounts (25) have also been expanded. A larger hosting base would provide a steady stream of prospects for Yahoo's e-commerce services and pay-per-click advertising. "Upsell is an important part of this, and we've always had success with upsell," said Riley. "We really cover a wide range of our users' needs. We also have the most sophisticated tools for the hardcore domains user."
Yahoo's $9.95 pricing is designed primarily to attract new users, rather than draw domain clients away from competitors. "Our focus is not currently on the switchers," said Riley. "We really want people who want to build a web site on that domain."