On Mon, 11 Sep 2000, Saurabh K. Agarwal wrote:
> I am a regular subscriber to the list and have observed the fact that
> whenevr someone demands to reduce the price or informs the list that
> somebodyelse is providing the same for less SOME OTHER GUYS (NOT ALWAYS FROM
> OPENSRS) COMES AND START SHOUTING "GO TO THAT REGISTRAR" OR "GET THE ICANN
> ACCREDITION."
>
> It is not fare, This list is meant to discuss the issues with domain
> registration. and if a RSP raises the issues it must be taken for
> discussion.
Individuals express their opinions, others respond with theirs. What is
not fair about that? The possibility that others don't agree with your
position? Has their been a communication from OpenSRS management that
such discussion is forbidden?
> I 100 % AGREE that OPENSRS system & support is excellent
No, it isn't. There have been a number of outages in recent history, the
effects of which were apparently exacerbated by the lack of a 24/7/365
staffed NOC. What is excellent is that Tucows is very open in
communicating their situations and resolutions with the members of this
list.
> and that is why people like us like opensrs only even if somebody else
> can offer low prices. But it DOESN'T MEAN THAT WE HAVE NO RIGHT TO
> DISCUSS THE PRICING ISSUE HERE.
Domain names are quickly becoming a commodity market. It is also a highly
volatile one, given the immaturity of the market in question (post-NSI
monopoly) and the corresponding high volume of new entrants into the
space.
Entrants into newly-emerging commodity markets usually operate something
like this: "In order to establish marketshare and place pressure on
'oldco', 'newco' announces they are offers their widgets for .02 less than
'oldco'. Next week, a new company enters the fray, offers widgets for .02
less than the previous 'newco'. This cycle of downward pricing pressure
continues.....
The logical conclusion if every entrant approached a market in this
fashion?
Mass consolidation, with the couple or few clear market leaders left
standing raising rates(see 4) below.) "Joe's Car Wash and Shared
Registration System" will not last(at least in the registrar space)
by focusing their efforts towards being the absolute cheapest registrar
out there.
The reasons for this are simple:
1) In order to achieve success in utilizing a lowest-price strategy
to gain a significant foothold and/or market dominance in a given space,
all a new entrant need do is a combination of outspending, outlosing,
outmarketing and acquiring every credible competitive threat in the space.
This is a tactic that organizations with deep pockets traditionally
utilize to great effect.
Ask yourself, in a battle of
outspending/outlosing/outmarketing/acquistions, who is the
likely victor, Joe's or say an organization such as Verizon or
perhaps AT&T?
2) Subsequent to 1), if Joe's foolishly attempts to compete primarily on
price point, the quality of service that Joe's is offering inevitably
diminishes rapidly along with the opportunity to increase penetration
through obtaining new customers/offering new services while the risk of
failures, their severity, and their duration correspondingly increase as
attempts are made to cut all possible expenditures to the bare minimum.
Such expenditures(in this space) include personnel,services(both those
that they offer and those which they purchase), marketing, hardware,
software, and development. In other words, everything that made them
competitive.
3) Bottom-feeder customers(those focused strictly on price) will leave
the minute someone offers them a price that Joe's simply can't match.
(they also tend to be the most demanding and expensive in customer
support costs in my experience, but that's another story....)
Once Joe's is perceived by such a price-driven customer base as offering a
substandard set and/or quality of service relative to other players in the
space and their pricing, customer attrition occurs. As revenue decreases,
the downward spiral continues to one of two conclusions: Joe's exits the
registration space, or gets bought(if they are lucky enough to have a
sufficent enough customer base remaining.)
4) Also subsequent to 1), once one or more market leader emerge and feel
confident they are leaders corrective action against previously
artifically deflated pricing occurs which return rates to a level that
offer these organizations profitability, usually as much as possible(those
pesky investors/shareholders often demand a reasonable ROI....)
All one need to do to find prime examples of this senario is examine
activity in the telco and ISP industries over the past several
years(post-telcom deregulation.)
Fortunately, it is apparent that Tucows/OpenSRS is driving towards a much
more enlightened strategy given their customer base, their position in the
marketplace, and the depth of their pockets: An open-source
registration system offering potential first-movers advantages(to date
no one else I am aware of has offered such a system), maintaining open
communication with their customers, *competitive* pricing on registrations,
and most importantly viewing registration not as their sole reason for
existence, but rather as adjunct/complementary to their other service
offerings present(such as the Tucows mirrors) and future. The registration
services adds "stickyness" to the organization as a whole.
Their other option is of course to immediately drop their registration
fees immediately to match those of any yahoo offering a lower price while
quality of service suffers.
Further, the amount of money in question is what, some percentage of $4
of a $10 fee per year? This when a couple of years ago you couldn't obtain
a domain name in .com/.net/.org for anything other than $35 a year?
> Without taking the name I would like to inform you all that some of the
> registrars (from India) are offering prices as low as USD 7.50 even to
> end-user with some of the FREE FACILITIES e.g. mails, dns, url/ ip
> forwarding etc.
So? At that price point they're either losing money, or offering crappy
service. Neither is a sustainable business model barring the possibility
that they have those sufficiently deep pockets mentioned earlier
necessary to outlast their competitors, or they are simply building a
sufficient enough customer base to be acquired. If they don't have the
funds, they'll cave in under their own weight as demand increases for
their money-losing services beyond their ability to execute. If they do,
then why on earth would you suggest playing to their strengths and smaller
companies weaknesses by attempting to go head to head with them based on
price?
What types of individuals/organizations are so obsessed by the absolute
lowest price, and why would anyone want them as a customer?
> But In my opinion it is again a duty of OpenSRS only to protect their RSPs
> and they only can enable them to compete in the market.
The duty of any organization other than a non-profit is to make money.
The "moral obligation" of any such organization is to serve their customer
base. In my mind, that obligation is best fullfilled by offering a good
product, superior customer service, and competitive(not necessarily the
cheapest) pricing. There is no duty for an organization to "protect" their
customers. Protection is the pervue of police, the government, and the
mafia.
In short, if you want to be successful, be the best, not the cheapest.
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Patrick Greenwell
Earth is a single point of failure.
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