Melbourne IT flying high - for now - News - Business

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This story was printed from ZDNet Australia.
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Melbourne IT flying high - for now

By James Pearce, ZDNet Australia
August 13, 2002
URL: http://www.zdnet.com.au/news/business/soa/Melbourne-IT-flying-high-for-now/0,139023166,120267357,00.htm

Melbourne IT may have posted better than expected results in its half-yearly report, but industry pundits say the next half-year is what the company has to worry about.

-Melbourne IT is about as quality a registration business as you can get but unfortunately that's not enough to save them longer term," John Brand, senior analyst with META Group, told ZDNet Australia. -The commoditisation of the domain name business means that it has to find alternative revenue streams to keep growing."

Brand said the natural extension for a registry service would be to move into the directory business, but pointed out that if the timing was not right management could over-capitalise and destroy previous successes.

According to Brand, the next 18 months will be a crucial period for Melbourne IT. -I've seen little from them so far that shows where exactly they are heading but this should be a worry more for investors than the average customer," he said. -The future is certainly not clear for Melbourne IT and time is definitely running out for it to make a strategic move that will secure its future."

For its part, Melbourne IT recognises that its dream run in the local domain name space is at an end. -Our best estimates indicate that the available market will expand, but Melbourne IT will obviously have a smaller share," said Melbourne IT's CEO Adrian Kloeden in the company's half-yearly report. He described the pricing of some of its competitors as unrealistic and unsustainable.

-Now that you have to pay AU$50 to the registry, it's just not feasible to sell domains for AU$50-60," said Valenta. -It's a bit like the One.Tel of the phone industry, people who sell domain names for less than it costs to run the business will go out backwards. We're certainly not going to cut our own throats."

Melbourne IT already has an agreement with Looksmart whereby each sells the other's products, and said it is investigating other revenue opportunities. -We're looking at whether we can apply our domain name technology to other businesses, but there's nothing specific at the moment," Melbourne IT spokesperson Tom Valenta told ZDNet Australia, indicating that the company was focussing on the international domain name market.