January 28, 2004 -- (WEB HOST INDUSTRY REVIEW) -- Like an iceberg in the stream of e-commerce, only the tip of VeriSign (verisign.com) is visible to the ordinary Web user. Its familiar checkmark symbol ensures that online payment transactions and accompanying information stays secure and protected from online spoofers, hackers, and thieves.
VeriSign's secure payment system serves more online retailers than any other such service, enabling more than 100,000 online merchants to process tens of millions of transactions each day. It handles nearly 30 percent of all online payments processed in North America. During the height of Christmas shopping between Thanksgiving and Dec. 16, 2003, it handled a 39 percent increase in transaction volume over the year before or 23.6 million online merchant payment transactions totaling $3.5 billion.
The Mountain View, California-based company is most recognized for its site seal security services, but its offerings are now so broad and Internet-critical, says VeriSign, that one day it may be as essential as a utility company.
"VeriSign is trying to be a sort of a digital infrastructure company," says Mark Griffiths, vice president of Security Services. "We will be a company that will keep certain services running just like the telephone runs for you today."
Today, Verisign, boasts $1 billion in annual sales, employs 2,500 workers worldwide, has operations in 45 countries and offers three core services: security, telecommunications and naming and directory services. Each group accounts for about a third of the company's revenues. Customers range from consumers and retailers to large enterprises.
Analysts through most of 2003 regularly cautioned that VeriSign would suffer the same economic slump as other technology sectors, though some of those analysts now hesitate to say anything about any company, due to scrutiny from federal regulatory bodies. Nevertheless VeriSign's ongoing acquisition and expansion tactics seem to speak for themselves, underscoring the company as a leading provider of critical infrastructure services for the Internet and telecommunications networks.
Of its three core businesses, security spawns the most international growth, currently generating 30 to 40 percent of its revenue from international sources.
"We have a couple of [customers] that are multi-nationals outside North America, and we manage some of their firewalls and their intruder detection systems from within North America. This is a growth area we are trying to expand," Griffiths says. Its expansion into the managed security services market will come either through partnering with other companies by expansion through acquisition, he says.
The company already has a relatively large partnership program for providing managed security services. As a component manufacturer, it sells some of its technology through vendors or resellers.
One significant reseller is system integrator IBM (IBM.com), which sells VeriSign's PKI (Public Key Infrastructure), a framework for authentication services designed to ensure confidentiality by verifying that users are who they say they are and not spoofers trying to steal information.
Some resellers offer VeriSign's firewall and intruder detection management as a front-end offering. A system of international affiliates acts as combination reseller/OEMs (original equipment manufacturer) selling VeriSign's managed security services as back-end infrastructure to customers in individual markets.
VeriSign also holds key partnerships with hosting providers. Three years ago, customer demand motivated San Antonio, Texas-based Rackspace Managed Hosting (rackspace.com), to select VeriSign to provide digital certificates for its managed hosting, says Robert Miggins, vice president of Sales and Marketing at Rackspace.
"Our customers were asking for SSL (Secure Sockets Layer) certificates and specifically Verisign, which is the number one name in SSL certificates. It was a pretty easy decision. We do the installation and initial configuration for the certificate," Miggins says.
"They have a product that is very well respected in the marketplace, and for us to be partners helps strengthen our offering. It lends credibility to our offering. I would say we have gotten everything out of the partnership that we were hoping for and probably a little more," he says.
VeriSign recently acquired a technology company in Brazil, in a move intended to help speed the international expansion of its telecommunications services. The company operates one of the largest independent SS7 (signaling-switching) networks connecting callers to destinations and has approximately 300 customers for that and related billing services. They are mostly small, tier two North American Telcos, including Cingular Wireless.
"Over the next few years you will see us starting to expand internationally, and you will start to see us segment our customers into wireless, wire line, and cable as the three distinct Telco customers that we deal with. Because we focus on specific services, we can actually provide them more cost effectively than some of the tier one vendors can do for themselves," Griffiths says.
The company's Naming and Directory Services is based on ATLAS, (Advanced Transaction and Lookup System), a distributed database enabling fast lookups - more than 10 billion per day for .com and .net names. Anytime anyone types in a URL, chances are it will hit one of VeriSign's servers to find the appropriate IP address for a Web server. The same thing happens with e-mail to find the quickest route to the delivery destination.
"Because we handle all that, the US Department of Homeland Security actually designated two of our data centers as critical infrastructure," Griffiths says.
Although the company is in the process of selling the domain-name-sales portion of its business, it will hold onto the DNS duties for the .com and .net extensions. Approximately 30 registrars sell the domain names to end-users, with VeriSign receiving $6 from the fee for each domain registered.
Among the varied Internet-related services it provides, the company's overall goal is to become "the trusted supplier of digital infrastructure... sort of akin to telephone, power, or gas companies that 99.999 percent of the time are up and running," Griffiths says. "We are trying to help provide secure services, such that whenever you go out and use something based on VeriSign technology or services you can trust that you are not going to be hacked into, viruses aren't going to hit you, and the service will be up and running for you."
