Manchester-based IT escrow, assurance and cyber security services business NCC (NCC) finally closed the book on its website domain name services venture today, selling its Open Registry unit in a €3.75m deal. The buyer is Luxembourg-based holding company KeyDrive and Terrain.com and the sale includes the operating units Open Registry, ClearingHouse for Intellectual Property, Nexperteam CVBA and Sensirius CVBA.
This pretty much draws a line under the company's domain name venture, a spirited but ultimately failed enterprise that, as we wrote in back in July and still think now, made perfect sense to try.
True, given the £7.9m original outlay on Open Registry in 2015, taking a 60% haircut looks like terrible business. But this failure remains a shock, and here's why.
SURGING HACKING ATTACKS
Corporate and public organisation websites and databases are coming under intense and increasing fire from cyber criminals. There's a litany of hacking attacks on consumer facing organisations over the past couple of years affecting millions of customers across the globe and causing almost incalculable reputational damage to the targeted businesses.
Remember the massive fallout at TalkTalk (TALK), credit checker Experian (EXPN) has been a victim, and most recently, Yahoo admitted that a billion of its users may have had some form of data stolen. Even the US's shadowy National Security Agency was targeted.
This was a gap in the market that NCC tried to fill. Its Open Registry unit was set-up to provide secure web addresses for organisations under the .trust domain name branch, a .com or .co.uk equivalent. With a potential ballooning number of new top level domains (TLDs) coming on stream over the next few years - .info, .biz, .xyz are some of the most popular - this was a bright idea.
Instead of, say, New Bank Corp having to invest in and manage a host of new internet addresses to underpin its branding, it would push everything through the .trust route, security monitored by NCC.
DEMAND GOES AWOL
It looked very much like a enterprising UK business trying to lead a largely IT unsavvy market. But demand failed to materialise in anything like the scale the company had hoped for.
'With security and reputation protection high on corporate agenda’s, trusted domains sound like they should be a winner but within the bigger digital transformation picture it appears they were not a priority and failed to create the critical mass needed to make it a viable operation for NCC,' says Angela Eager, analyst at the TechMarketView website.
So Open Registry has turned out as a demonstration of how difficult it is to predict the future direction of enterprise evolution.
At least NCC can now put this episode behind it and fully focus on its core knitting of IT escrow, assurance and cyber security services. The assurance side needs to the effort after October's surprise profit warning, from which NCC's share price is still trying to recover. Even after today's near-2% rise to 188.5p, the stock remains half the level of 2016 highs.
