NetRegistry has acquired the assets of PlanetDomain from Primus Telecommunications for more than $8 million.
The acquisition was funded with cash and debt.
PlanetDomain is a top five Australian domain name and Web hosting company serving over 100,000 domestic and international SME's, while NetRegistry is the second largest Australian hosting company with more than 150,000 SME customers.
Announcing the acquisition, NetRegistry CEO Larry Bloch said PlanetDomain will continue to be managed by its current staff in Melbourne, with no job losses.
"NetRegistry now dominates the Australian market in domain name registrations, with 27 percent market share for 2006", Bloch said.
"This acquisition leverages NetRegistry's world-renowned clustered infrastructure for small business application hosting, which will be used to expand the range of services available to PlanetDomain customers to include offerings in high growth online marketing and advanced hosting services."
NetRegistry came third globally in a recent international evaluation ranking the quality of customer service of the world's 50 largest hosting companies, according to Bloch.
"The company's philosophy is that excellent customer service greatly assists our 250,000 SME customers embrace online business," he said.
"NetRegistry has direct access to vast numbers of SME businesses via fixed line, mobile, e-mail and Web property eyeballs.
"Our strategy is to acquire relationships with SMEs at the start of their online journey - buying a domain name.
"We then apply our proven skills in customer service to build trust and loyalty, gradually increasing the breadth of subscription services provided," he said.
"All NetRegistry services are delivered via our unified technology platform and billing system and supported by our Sydney based integrated customer service and support operation."
Bloch said the company is still at an early stage of a long wave of innovation in the provision of online services.
He said this includes more acquisitions, particularly in the hosted applications market.
Although hosted software has been around a long time, it has gained special momentum in the past 12 to 18 months, thanks to infrastructure improvements, like faster Internet connections and more powerful PCs.
Hosted applications are popular, particularly among small businesses, because they don't require companies to invest in server hardware or spend time and effort installing and maintaining them.
"A lot of the activity is happening in the market for collaboration and office productivity applications, which has been ruled for many years by Microsoft," according to Cutter Consortium analyst Jeffrey Kaplan.
"The move is part of a broader trend toward software-as-a-service (SaaS) which will become a dominant force in 2007.
"SAAS has entered the mainstream and is poised to have a "watershed year."
When it comes to SAAS there is interest in the enterprise, according to a Forrester Research report compiled in November, 2006.
"Enterprises use SAAS most often for human resources, enterprise resource planning, customer relationship management, and security," Forrester reported.