Now that VeriSign, the company that authenticates most commercial Web sites, is purchasing Network Solutions (NSI) for $21 billion, the domain-name giant has become even more powerful. But is the combo too big for its own good?
Together, the companies want to offer one-stop shopping for all your domain needs: from registering your name, to hosting, to offering secure transactions on your site. "The idea is to marry our security and validation services with their base of customers," says Anil Pereira, vice president of VeriSign's Internet services group. "When you put together our services with NSI's, you get the ability to service customers from the cradle to full maturation."
But how many customers can they really hold the hands of? Although the combined company would control more than half of the domain registration business and more than 90 percent of the present Internet authentication business, neither colossus has the proven ability to host and secure millions of Web sites. NSI has registered over 6 million domains, but before the acquisition, VeriSign's customer count hit only 215,000.
And customers may not flock to Network Solutions for security solutions, given its shaky reputation in that department. It's tripped very publicly several times, transferring domains away from their rightful owners. And it continues to stumble: In January, hackers successfully hijacked several domain names; right afterward, NSI's computers hiccuped, telling site visitors that popular names like Amazon.com and Yahoo.com were up for grabs.
VeriSign's security expertise might help plug these holes -- or at least shore up its image. The company handles secure e-mail and other services for the top 40 e-commerce sites and all the Fortune 500 companies with a Web presence. However, VeriSign has its hands pretty full as it is: It's been on a buying frenzy, and just completed the acquisitions of Signio, a payment-services company, and Thawte Consulting, VeriSign's primary competitor.
For all of these reasons, NSI's major competitor, Register.com, remains unfazed by the NSI sale. It sold just 13 percent of the domain names registered in the last quarter of 1999, and does not yet offer security services. But fresh from its successful IPO, and seeing its stock jump on news of the acquisition, Register.com only has good things to say.
"It's really is a shot in the arm for all domain registrars," says Sascha Mornell, Register.com's vice president of marketing. "Certainly they will continue to be the 800-pound gorilla of the industry, but I think there's room for everyone."