March 15, 2004 — (WEB HOST INDUSTRY REVIEW) — Yahoo (yahoo.com) and SBC (sbc.com) have extended their business relationship, merging their expertise and know-how into an all-out assault to win market share in the highly competitive SMB shared hosting arena.
By coupling the strength of the Yahoo Small Business hosting brand with SBC’s broad footprint in delivering DSL services the duo plan a combined edge to dominate SMB hosting.
The new partnership initiative of SBC Yahoo Web Hosting was born in January following the success the companies had with the launch last year of the SBC Yahoo DSL business, says Jim Gewecke, director of DSL for SBC.
“It was the first DSL service to provide customized features and tools that were specifically designed for small businesses,” Gewecke says. “We have been able to team together to deliver a best in class broadband service to offer our subscribers a really unparalleled online experience. That’s the key to us: Our ability to work together.”
That ability to work together has equipped the wide-ranging SBC sales and marketing channels with the tools required to push the partnered hosting brand to the millions of small businesses already using its access products. Today, SBC has more than 500,000 business DSL customers, ideal targets for the SBC Yahoo Web Hosting brand.
The hosting offering is a component of Yahoo’s Small Business product line, a comprehensive suite of services that enable small businesses to get online, sell online and market online, says Rich Riley, vice president and general manager of Yahoo Small Business.
“We are big believers in providing a one-stop shop. We think small businesses want to bring their businesses online; they want to deal with one trusted branded provider and they want it to be as easy as it can be,” Riley says.
Historically, providers in the market have not made it all that easy, he says.
The compelling value proposition for the small business person lies in “the ability for us to bundle in SBC’s access products with our product line in a seamless fashion, seamless meaning customer support, billing, control modules, things like that,” Riley says.
Since Yahoo operates its own e-mail, hosting and e-commerce platforms, it can integrate those products into an offering from which small businesses can choose what fits their needs, Riley says. The package includes Yahoo’s considerable expertise in offering e-mail services, including spam protection on e-mail, and the components of its e-commerce and marketing services, which allow customers access to its vast network to list products in places like Yahoo shopping and Yahoo search.
An attractive ingredient of the three pricing levels (from $11.95 to $39.95 per month) of SBC Yahoo Web Hosting, is the Yahoo SiteBuilder, a downloadable program that contains more than 300 vertical templates and has a robustness not found in the off-the-shelf WYSIWYG (What You See Is What You Get) products. “They many times don’t give enough power to create a custom Web site to be proud of… and have tools that, for a lot of small businesses, are just too complicated,” Riley says.
The enormity of the small business marketplace is compelling for the two giants. The potential for shared hosting has been estimated at $1.3 billion among companies with fewer than 100 employees.
“We have a variety of options that small businesses need to help them communicate with their customers, their suppliers and their employees. With SBC’s connections for businesses we offer these owners the ability to select the services they need to help simplify their operation and at the same time save them money by working with one supplier to get connected with voice, Internet and now the hosting services,” Gewecke says.
The number of hosting providers vying for a slice of the SMB market doesn’t concern Gewecke, who maintains that SBC Yahoo Web Hosting has enough integrated tools and featured components, including a powerful control panel that no one else offers. “It really helps to differentiate us from the competition for the customers and market share.”
The SBC Yahoo partners also have combined forces to sell DSL and dial services, which “combine the features of Yahoo with the reliable connection and 24-hour customer service of SBC.”
The co-branded offering has captured the attention of the analyst community and gained high praise from Helen Chan, small and medium business analyst with the Yankee Group (yankeegroup.com) in Boston.
“It’s probably one of the better ones out there that’s a solution delivered by a service provider and Web site app provider. There are a lot of those types of partnerships out there but this is perhaps the most integrated,” Chan says, for the way it is packaged and the way the customer interacts with the product and service.
For small business customers, the value proposition of the offering is to help them become successful online with broadband access and a compelling Web site. “Yahoo does a really good job in formulating a package for a business – whether you are an expert technologist or you don’t know much about technology – to use the application pretty easily. They explain things in layman’s terms that not clouded by a lot of technology speak,” Chan says.
A top challenge SMBs face today is that they don’t get a lot of traffic to their Web sites, and Yahoo helps in that regard by linking the customer’s Web sites to the vast Yahoo network of products and services, she says.
As the two companies proceed with their newest business offering, both Riley and Gewecke are optimistic about the outcome of their partnership.
“Clearly Yahoo Small Business has partnered with the leading provider of access in SBC to offer a truly integrated product suite that meets the needs of small businesses and we think is differentiated in the market place,” Riley says.
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