Finding Real Value in Web Hosting

Note: This post was updated on January 6, 2014.

One of my web design clients wanted my help finding a cheaper web hosting option. Her colleague, also a client, had recommended she try hosting with Network Solutions for a low $2.99 per month. Naturally I told her I would help her.

Digital Housing, their existing provider were very cooperative and the transition process began apace. If you have ever undertaken the switch before, you know that changing from one web hosting company to another is seldom a straightforward and efficient process. It can take hours, even days to reach a live human representative who has been trained to persuade you to change your mind. Digital Housing, on the other hand, handled the issue with aplomb and my client was all set to make the switch to Network Solutions.

Her friend's recommendation plus the lower cost were compelling. But the more I learned about Network Solutions as well as other heavily positioned providers, the more my enthusiasm dimmed. The experience taught me a lesson about the hidden value that bargain shoppers are prone to overlook: the hardware, the practices, the security measures, relationships and the leadership. I now firmly believe that choosing the right web hosting partner may be just as important as choosing the right web developer.

A Consolidator of Services First of all, as a leading domain name registrar, Network Solutions doesn't host web sites as its core area of business. They are a consolidator of services: over the years, they along with others that share the same business model have been known to outsource various web hosting services to a number of four or five different providers, some eventually acquired and some not, and as a client you really never know who or geographically where you might be assigned or located.

Not all providers are equal in ability or service, no matter how small or large. For example, another client had a hosting account with another large hosting provider that advertises to be "Global Experts in Online Solutions for Small Business. "This organization had apparently outsourced service to an Atlanta based provider. The client didn't know that this was the case because they thought they were hosting with the "Global Experts in Online Solutions for Small Business". Well, the outsourced Atlanta provider lost a server during facility renovation and relocation. They could not get the client's web site back on line for almost 3 weeks because the provider lost the physical disk drives and had not been doing full server backups. A good web hosting company always makes regular backups. That way, they can restore your site in minutes rather than weeks. Don't assume that every web host backs up your site systematically or at all. It's a really good idea to make backups of your site yourself. POP keeps current backups of sites that we have under maintenance contract.

How Network Solutions Began It is perhaps always a good idea to understand the history of a host provider and Network Solutions is a really good example and they are just one of many because longevity may not always be relevant to the outcome you are looking for. Keep in mind that you always want your host provider to provide hosting as its core area of business not as an ancillary product or service no matter how long the company has been in business.

Network Solutions, Inc started long before the Internet as an application development consultancy. In 1991 the US Defense Department began the first steps in the privatization of its ARPANet, the predecessor to our public Internet today. It moved the (DDN-NIC) domain name administration and management from the Stanford Research Institute and awarded the administration and management of its domain name service to Network Solutions, Inc.

In 1993 the US Defense Department relinquished ownership of DDN-NIC and moved it under the U.S. National Science Foundation that proceeded to create the non-profit Internet Network Information Center, or InterNIC. The administration and management of InterNIC was principally provided by AT&T with Network Solutions, Inc. successfully retaining the domain registration service contract. Acquired in 1995 by Science Applications International Corporation, Network Solutions, Inc virtually monopolized the domain name registration market as it began charging for domain name registration. However in 1998 along with AT&T discontinuing InterNIC services, reorganization of InterNIC and the formation of ICANN domain name assignment was no longer synonymous or solely with Network Solutions, Inc.

Network Solutions was doomed from the outset of ICANN because the market for domain registration was now open to other players and would be shrinking. Lean and mean startups like goDaddy ate their lunch, today having more than 3 times the domain registrations as Network Solutions.

In 2000 Network Solutions was acquired by VeriSign, Inc. for $21 billion only to be sold 3 years later for $100 million to a private equity group.

Since then, Network Solutions has traded hands from one capital investment firm to another. The latest owner is General Atlantic, a private equity company who acquired them in February 2007 for a rumored price of $800m. This may be one of the primary reasons for their outsourcing and acquisition of other service technologies to boost revenue, and yet in spite of this Network Solutions might still not be making it.

In 2003 90% of Network Solutions revenue was from domain name registration and since 2005 they have added more than 69 products and services in order to replace declining revenues in domain registration.

Adding insult to injury in August 2009, Network Solutions notified its customers that its "secure" servers had been breached that exposed over 570,000 names, addresses and credit card number information of clients who purchased services from Network Solutions.

Surprise! Massive Overuse Charges As with most other things in life, you get what you pay for and hopefully you will never experience the dreaded "hidden" charges. If your business does not grow it won't matter and you won't see limit charges and other hidden fees. But even if your web site doesn't build that much momentum, there are other dangers that befall poorly protected sites.

Heard of goDaddy? You've probably seen their ads with Danica Patrick. Many people register domains through them and quite a few also contract with them to host their web sites. Before he moved his site to a host provider shared with one of my clients, one client, let's call him Dave, used to host with goDaddy. His site got hacked and was implanted with a spamming worm. A spamming worm runs a program that searches the Internet for poorly protected computers. Once installed, it then runs up bandwidth charges that often exceed the allowable limit. GoDaddy sent Dave a $1,800 bill for bandwidth overuse charges.

Likewise Network Solutions was hosting a site that had $4,400 in bandwidth overages because the customer insisted it be hosted there. When we finally moved it we got redundant premium bandwidth from AT&T and Level (3) for them for only $85 per month.

So maybe a smaller host provider is a little more expensive for smaller web sites that don't attract that many visitors. But they're actually cheaper than the cheap hosting companies if your business is growing and attracting more visitors every day.

The Quiet Hosting Company The host provider I partner with does not invest a lot of time and effort into marketing their services, which may put them at a disadvantage in the short term. They prefer to invest in developing personal relationships with their customers that are not just names and numbers. They participate in their day-to-day operation and understand their current and future needs and it"s hard to put a price on that value.

Unfortunately companies like goDaddy that run expensive commercials on TV about hosting for less than $10 per month do a disservice to business hosting because their consumer solutions have become pervasive. What the bulk-hosting providers won't tell you is that they have a churn rate of between 40 to 50 percent. A smaller, more conscientious web hosting company typically has a churn rate closer to 3-5 percent.

Always make sure that you pick a hosting partner and a hosting solution that match your expectations. You'll sleep better at night and your customers should have a better experience overall. Many hosting companies have promoted the notion of hosting as a commodity because the ubiquitous use to date has been to put up online brochures rather than creative solutions that demand functionality and security.

As for my client, she asked to remain with Digital Housing and the issue was resolved.

Keith Teruya contributed substantially to this article. His insight and knowledge were indispensible.

 

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