Network Solutions Enters Hosting With Free Domain Offer

In a break with past practice, Network Solutions this week began offering free domain names to web hosting customers, a sign of the growing importance of shared hosting in the company's small business strategy. "We are using a free domain as a marketing device," said Champ Mitchell, chairman and CEO of Network Solutions. "That's new for us, and this is a big change for Network Solutions."

While many registrars offer domains for less than $8 a year, Network Solutions sells .com names for $34.99 a year. The company is bundling a free domain with one-year signups for new web hosting plans, which range from $9.96 to $29 a month. NetSol is following the lead of registrar competitors Go Daddy and eNom, which each expanded into shared hosting in 2003, prompting hosting companies to slash domain prices.

Network Solutions has begun growing again after years of decline. But the vast majority of its 1.4 million hostnames are parked domains and one-page template sites. Since January 2004, NetSol's active sites - those containing multi-page content - have grown from just 406 to 17,200 this month. The company sees its new hosting packages as the key to moving to the next level.

Hostname Growth at Network Solutions

Mitchell says the expanded plans, which are available on Unix or Windows, will be a better fit for small businesses than Image Cafe, its existing template-based site creator. "Image Cafe is frequently a good place for those folks to start, but does not offer a robust enough platform," said Mitchell. "Now we can host them on a platform that's more expandable."

Lower hosting prices have been driven by advances in automation, which allow customers to manage their own web sites through web-based control panels, reducing support costs for providers. Mitchell believes that while price matters, customer service is the critical issue for his target audience of late-adopter small businesses. "One of the big reasons they haven't gone online before is that they're smart people, but they're not technologists," said Mitchell. "They require a lot more personal attention."

Like its competitors, Network Solutions is rounding out its offerings to serve as a one-stop source for hosting, domain and e-commerce support for small businesses. "The hosting business isn't that attractive as a stand-alone business," said Mitchell. "But given the needs of our small business customers, we felt we had to own the platform and the customer relationship."

In the domain business, staying competitive has meant acknowledging pricing trends, if not copying them. Network Solutions has offered $9.99 a year rates for transfers from other registrars, an example of its focus on customer acquisition.

"We're doing offers that are price-competitive," said Mitchell. "That's reduced the margin on domains by a little bit, but it's brought in a lot of business. Our margins are at least twice the industry average. In the domain name industry, lots of companies have squeezed their margins to the point where they're not going to be around for too much longer."