Yahoo! Ups Ante for Small Businesses

Web giant Yahoo! is gambling that price cuts on its domain name registration and Web hosting products will make it more competitive with discounters in the space — which means that small businesses looking to move online get a sweeter deal through Yahoo!.

Yahoo!, of course, offers packages that enable Web merchants and other small businesses to buy a domain name, design and host their Web site, maintain a list of products, and market their wares.

Now, the Internet pioneer is beefing up its Web hosting plans while reducing prices on domain registrations. Domain names can now be had for $9.95 per year, while Yahoo!’s upgraded Web hosting offering promises a whopping 2 GB of disk space, 25 GB of bandwidth and 25 e-mail accounts.

Previously, Yahoo! charged $35 for domain names. Its Web hosting packages also offered dramatically smaller Web space and bandwidth allocations. That was roughly on-par with the plans offered by registrars like Network Solutions and VeriSign.

With the changes, Yahoo! enters a price point previously limited to discount providers like Go Daddy.

“We think this is a very changing-the-game kind of launch,” said Rich Riley, vice president and general manager for Yahoo! Small Business services. In Web hosting and registration, “you have the discounters on one side … with the supposedly premium providers on the other side. We are right in the middle.”

Web hosting and domain registrations both continue to be a hot market for providers like Yahoo!. According to VeriSign, more than 65 million domain names had been registered by first quarter — and the trend has only grown during the past four years.

Yahoo!, which estimates that it has about 300,000 active sites, also has a lock on the e-commerce front — it claims to host one out of every eight online stores in the U.S. But it handles just a sliver of the domain registration market — overseeing registrations for just 600,000 domain names — a fact that Yahoo! wagers will change with the price drop.

“You’ve seen us launch Web hosting and take leadership there, and launch merchant services and take a leadership there,” Riley said. “We think the $10 price point … is really going to disrupt the domains market.”

In addition to helping Yahoo! better compete with the discount Web registrars and hosts, the moves also aim to woo new small business clients by making it more compelling to buy a suite of services (such as e-commerce) from Yahoo! alone — rather than through a variety of providers.

For instance, Web hosting and e-commerce providers like Microsoft bCentral (now Microsoft Small Business Center) and Interland position themselves as “full-service” hosts, where small business owners can find a suite of registration, hosting, merchandising and marketing services.

“We think [the discount hosting market] is a strategic onramp and the place where we want to establish a leadership position,” Riley said of the positioning. “Our strategy to get there is to have really world-class products, then seamlessly bring them all together and be that one-stop-shop for small businesses.”

Christopher Saunders is managing editor of eCommerce-Guide.com.