Opportunity for Domain Resellers & Hosting Companies in India

Manish Dalal

Thursday, October 17, 2013

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India has one of the largest SMB base in the world

Retail41%

Manufacturing25%

Prof. Services

5%Education

4%Healthcare

2%

Others23%

China (Rank 1) India (Rank 2) USA (Rank 3) Brazil (Rank 4) Russia (Rank 5)

~8 Mn~14 Mn~26 Mn~47 Mn50+ Mn

Countries With Largest SMB Bases

Vertical Split(~47 Mn SMBs)

Horizontal Split(~47 Mn SMBs)

~ 29.7 Mn~ 16.0 Mn~ 1.3 Mn

Medium Enterprises

Small Enterprises

Micro Enterprises

100 - 1,000 Employees

11 - 99 Employees

1 - 10 Employees

Source: Zinnov SMB Study

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SMBs contribute significantly towards the economy

SMB Contribution To

The Indian Economy

17%Of Total Indian

GDP

99%Of Total Indian

Firms

40%Of Total Indian

Workforce

45%Of Total Mfg.

Output

40%Of Total Exports

From India

57% (~5.6 Mn) of all addressable SMB units in India have a PC today

Total PC Penetrated Units

Micro2.9 Mn

Small2.4 Mn

Medium0.3 Mn

25%Of Total Domestic IT

Spending

Source: Zinnov SMB Study

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~4.5 Mn

SMBs with PC Access

~2.6 Mn

SMBs with PC Internet access

~1.3 Mn SMBs online

through aggregators

~1.4 Mn

SMBs with e-mail Access

Opportunity for domains and websites in the SMB segment is still tremendous

Current Base Of SMBs With

Domain Names

~ 1.1 MnWebsites

~ 520 K

Current Addressable Opportunity1

Note: 1 All figures exclude ~1.1 Mn SMBs with domain namesSource: Zinnov SMB Study

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However, a variety of factors are still impeding SMBs to establish an online presence through a website

• A large number of SMBs do not budget for web presence; for those who do, the budget is usually less than INR 5,000

• Most of the SMBs are struggling with lack of internal skills to manage and run a website and manage website content

• SMBs are not aware of the key benefits of having their own website due to lack of knowledge and being less tech savvy

• Most of the SMBs are satisfied with aggregator websites

• Satisfied with other sales channels such as telecalling, SMS/Email marketing and word of mouth

SMBs Satisfied with Alternate Sales Channels

1

Lack of Internal IT Staff

3

Lack of Awareness4

High Cost2

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Still, the majority of SMBs in India want to invest in a website and a branded email

Future Investment in a Website

Source: Verisign Research on benefits and barriers of bringing a small business online

• Close to 50% of SMBs in India say that they want to invest in a website

• More than 90% of SMBs in India also say that getting a branded email on their own domain is important and lends credibility to their business

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Indian domain and hosting market is fragmented and provides tremendous opportunity going forward

>1,000 active hosting

companies

>100K active resellers

Top Registrars focused on the Reseller

Model

Market Opportunity By 2016

16 MnDomains

7 Domains per 100 Internet

users

6.4 MnHosting Packages

~USD 500 Mn

Annual Sales

Current Market

3.5 Mn Domains

3 Domains per 100 Internet

users

Huge Growth Opportunity

USA and UK have 27 domains/ 100 Internet

users currently

Source: Zinnov Analysis

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A number of trends are emerging in the Indian hosting and domains market

Increasing Focus Of Global Competitors

Value Added Services

Increasing Evangelizing Activities

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Top global hosting companies are now targeting the India market aggressively

• Hostgator established its Indian office in Mangalore, Karnataka . Servers are located across Mumbai, Hyderabad and Mangalore

• Dedicated support provided through partner in India from Mangalore

• Payments accepted in INR and cash payment facility now provided to gain traction

• > 150,000 customers supported currently

• Customer care facility recently inaugurated in Hyderabad, India. The centre operates in local languages to increase customer satisfaction

• 60% of GoDaddy India SMB customers are from tier 2 and 3 cities

Source: Company Websites, Zinnov Analysis

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Increasing competition has led to rapid introduction of value-added services

Source: Company Websites

Website Building Assistance

Mobile Websites

• Build your own website models introduced

• Local website developer search platforms created

• SMS to website product launched (e.g. build a website with 4 SMS’s at Nowfloats)

• Verisign offers its product MobileView to registrars for free. The benefits are in turn passed on to the end customers

• Startups like Mobstac offer mobile and tablet-optimized websites and applications

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Evangelizing activities are on the rise to stimulate the ecosystem further

Dell teamed up with BigRock to bring web products and services to Dell customers at discounted rates to increase adoption

Educating SMB clusters on online identity benefits through various roundtables and education seminars across Gujarat, Bangalore etc.

Go Daddy partnered with Google in an offline campaign to promote .com website adoption amongst SMBs in Delhi, Mumbai and Hyderabad using a bus / canter

Google’s GIBO (Get India Business Online) program offers free .in domain name and website for 1 year

DELL

BigRock

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Hosting companies are well poised to tap the opportunity in IndiaHosters have an

advantage to tap the SMB opportunity

Customer Proximity

Customer Needs

Offline Payments

What Do the Hosters Need To Do?

Invest In Marketing

Give customers choice

Display and explain offerings in detail

Create Relevant Offerings

Product/Service localization is of great importance

Increase value rather than decreasing cost

Give Unforgettable

Customer Service

Gain customer stickiness and trust

Customers willing to shell out money for quality of service

Partnerships

Partner with innovative firms to gain customer access and differentiation

Partner with established players looking to evangelize the market to gain mindshare

Thank You

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