FRAMINGHAM (03/10/2000) - VeriSign Inc.'s acquisition of Network Solutions Inc.
- a $21 billion stock deal announced this week - will create an Internet colossus that offers corporate network managers one-stop shopping for an array of services, including domain name management, user authentication, encryption and credit card payment.
VeriSign in Mountain View, Calif., is the leading provider of software and services for securing e-commerce transactions. NSI, in Herndon, Va., is the No.
1 domain name registrar and operates the central directory of names ending in .com, .net and .org.
The combination of the two companies was driven by VeriSign's desire to sell its trust services to Internet start-ups, which must first buy a domain name through NSI or one of its competitors. But the deal will affect virtually all corporations doing business on the 'Net because they are customers of NSI, VeriSign or both.
"A lot of companies have lost control over the various pieces of their business that are putting up Web sites, buying domain names . . . and implementing secure transactions over the Web," says John Pescatore, a research director with Gartner Group. "I see this combination helping large companies gain back control by offering a consolidated point of contact."
Pescatore predicts that the combined companies will cut new alliances with Web hosting and application service providers to provide cradle-to-grave services for e-commerce sites.
"All you need is the idea, and everything else from domain names to payment processing to Web hosting and e-mail can be outsourced," he says.
Corporate customers are optimistic about the merger.
"If I can deal with one company instead of 10 different companies, that's attractive to me," says Blair Miller, vice president of engineering at Thomson Financial Interactive, a Rockville, Md., company that operates more than 100 Web sites offering financial information to personal investors. Thomson uses VeriSign to verify new users during registration and to encrypt credit card transactions for report purchases. Thomson manages the domain names for its Web sites through NSI.
"Hopefully, this deal will simplify the paperwork that our network engineering group has to handle," Miller says. But he adds that it's premature to say whether Thomson would be interested in buying additional services from the VeriSign/NSI venture. "The efficiencies and the standardized pricing models that VeriSign and NSI could offer might be competitively advantageous to large, established Internet players like us, but it's too early to tell."
Corporate network executives "will have a slightly simpler world to deal with because they'll write one check instead of two," admits Frank Prince, a senior analyst with Forrester Group. However, Prince doesn't see much synergy between the two companies, and he says VeriSign may have paid too much for NSI.
VeriSign and NSI represent "two steps in the process of setting up a Web site, but they're different steps," Prince explains.
Officials at NSI and VeriSign say they will jointly sell, provision and bill their services to enterprise customers. NSI's ID Names service helps companies register names in multiple domains and synchronizes billing for large numbers of domain names. Meanwhile, VeriSign offers its Go Secure Service to companies that want to operate their own public-key infrastructures, as well as outsourced security and payment services to Web merchants and business-to-business exchanges.
"We both have account managers for our larger corporate customers," says NSI CEO Jim Rutt. "With centralized account management, we can provide an even greater level of service."
The two companies also will offer network engineering and design services related to domain name applications, directories, virtual private networks and security.
"If you're interested in setting up a supply-chain management system, we can help you issue credentials to people, issue purchasing cards and help you check users against domain names to make sure that they're not being spoofed," explains Anil Pereira, vice president of VeriSign's Internet Services Group.
Among the new services that the combined companies may provide is secure outsourced e-mail. NSI currently offers Dot Com Mail, a service that provides companies with domain-name-branded e-mail accounts.
"With the addition of VeriSign's capability, it's feasible that we can add digital signatures, encryption, notification and validation services for e-mail," Rutt says.