Google Sites Won't Kill Domain Registrars

Alistair Croll at GigaOm writes that the launch of Google Sites is bad news for domain registrars. In reality, Google appears to have made a conscious decision not to compete with domain registrars in their primary business: registering domains. When a Google Sites user registers a domain they are sent to Go Daddy or eNom. Alistair notes that Go Daddy's signup process offers many free services that are also included in Google Sites. "It's unlikely that people who come to set up a free site with Google Sites are then going to use GoDaddy to set one up," he writes. "Definitely a bad year to be a registrar."

Huh? Here's the real competitive opportunity that's being missed: Google is an ICANN-accredited domain registrar. If it wanted to rule the universe and bury the domain registrars, it certainly wouldn't be referring customers to Go Daddy to buy their domains. Google's accreditation has long been a source of anxiety for some folks in the domain and hosting business, who worry that Google might one day offer free domain names, effectively absorbing the $6 per name VeriSign fee to acquire many more millions of users. But that hasn't happened.

Instead, Google is referring thousands of customers to the registrars. Is Go Daddy CEO Bob Parsons grimacing every time a Google Sites user buys a domain, because now he'll be unlikely to give away a free wiki to that user? I think not. For Go Daddy, the domain purchase - and every subsequent renewal - provides an opportunity to upsell the customer on a growing universe of products, many of which are not offered by Google.

The domain name is the gateway to web hosting and e-commerce services. Go Daddy now manages more than 22 million domain names. The margins on those domains are thin, but there are much nicer margins to be had when those web site owners buy hosting services, dedicated servers and SSL certificates.

The potential end to domain tasting is also not a huge loss for most registrars, and certainly not for Go Daddy, which has been one of the strongest critics of the practice. The vast majority of the domain name tasting is done by a handful of companies - it used to be six or seven, but may be slightly more now - that built their businesses around the practice.

Being a domain registrar has its challenges, so be sure. But business is booming in many niches in the domain business. Google Sites is a larger threat to web hosting specialists, most of whom aren't leading with their wikis at the moment.