OpenDNS: A Valid Web 2.0 Business Model; Is It Good For you?
By Angsuman Chakraborty, Gaea News NetworkWednesday, July 19, 2006
I am intrigued by OpenDNS business model. OpenDNS is a startup which offers DNS service to any user accessing the internet. DNS is normally a hidden service. Yet OpenDNS carved out a business model which is very viable. But first how do you benefit as an user?
OpenDNS aims to makes your internet experience safer, faster and smarter. In plain English it will warn you of phishing sites (which anyway Internet Explorer 7 and Firefox will do too. Also it will automatically correct small spelling mistakes and guide you to the proper site.
In case where it is not sure about the site you want to go to it will present you will a list of alternatives. This is where it earns revenue. It will also add advertisements to these pages.
I doubt that it can really make your DNS access faster. In most cases your ISP is more likely to provide faster results. In case it doesn’t you can always use a local caching DNS server for free. It tremendously improves performance without having to send your information to OpenDNS.
OpenDNS will know all the sites you are visiting and your browsing patterns. It tracks which items you are clicking on the search results. How will they use this data? This data is a goldmine to advertisers and I am sure they will make a fortune by simply selling this data.
Marshall from TechCrunch thinks they do not have a viable business model. I disagree. Misspellings are much more common than anyone of us would care to admit. Serving ads on misspellings can provide significant revenue as you have dedicated users 24/7. Each user you convert to using your DNS is an user who allows you to correct his misspellings all the time. I have no doubt about the viability of their business model. The cost of running such business is small. You simply have to buy servers hosted in different countries.
My concerns are elsewhere. If OpenDNS is hacked, it will pretty much instantly disable internet access to all of their users (unless they change DNS manually). Worse, users may be directed to malware or phishing sites en masse. You cannot even trust your banking sites with proper url. The control you are giving to a single company is way too much in my humble opinion. Thanks, but no thanks.
Alternative viewpoints: Chris Pirillo, Matt Mullenweg, Kevin Burton, Scott Beale and Tom Raftery.
 mvsprasadarao |
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July 20, 2006: 7:19 am
Angusman, Another thing to consider: For non-techies, they really really like it. At the end of the day, that’s why we are doing it. If we ever did an enterprise product and most enterprises didn’t like it, maybe it’d be off by default. We’re a pretty transparent company. Maybe it’s the first WYSIWYG company. I keep saying it but I’ll repeat since it’s really important to me: this is is about reliability and control for our customers first and foremost. Their current DNS solution is not up to par. On top of a platform of reliable DNS we are adding the knobs and switches for people who want to take the firehose of DNS that comes into their network and begin to manage it a bit. That might come in the form of typo correction, some anti-phishing protection or a hundred other enhancements to recursive DNS. But the defaults are pretty good right now and the choice we’re giving users has been very well received. Best, |
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July 19, 2006: 9:47 pm
> the option to disable typo correction on a per-IP basis does prove that OpenDNS is will to take a loss on some of its users. I agree. This is pretty much the same as providing free service for a segment and charging for others. Overall that doesn’t invalidate the business model as a very small percentage of knowledgable users are likely to take advantage of it. Also it prevents bad press and improves word-of-mouth campaign. Overall I think it is a very innovative idea to pursue. |
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July 19, 2006: 3:09 pm
Just to clarify, OpenDNS may have built their business model off of the revenue generated via their typo correction search pages, but the option to disable typo correction on a per-IP basis does prove that OpenDNS is will to take a loss on some of its users. |
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July 19, 2006: 3:01 pm
Sorry, Angsuman, but you’re missing a few key points to the equation. The first is that a user can choose to disable typo (spelling) correction and phishing protection for his/her static IP address, which effectively debunks your theorized business model. The second is that OpenDNS employs a large singular DNS cache as opposed to most ISPs who maintain several small DNS caches. Under most ISPs, if the requested DNS information is not found on the first attempt, the request is passed from DNS server to DNS server until the information is located. Under OpenDNS’s large singular DNS cache, the requested information will be found on the first attempt, effectively increasing the speed of your internet experience. The third is the usage of stored data. According to the OpenDNS Privacy Policy, OpenDNS will not sell or disclose any personally-identifying information. Legal action may be taken against OpenDNS if they choose to breach their own privacy policy. I believe that OpenDNS’s ultimate purpose is to offer an alternative to your ISP’s DNS, and like most recent startups, they’re willing to offer a few innovative features with their DNS to make your internet experience safer, faster, and more user-friendly. |
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July 19, 2006: 1:30 pm
> Good software matters… and we will continue to expand our geographical footprint over time to address latency. Both of these steps can improve performance. But my hunch is that even the cumulative benefits over a caching DNS server wouldn’t be much for users. But then again it would be good to see some numbers. On windows you can get caching DNS server for free from AnalogX or better yet it comes with Agnitum Personal Firewall. Zero maintenance operation, enable it and forget. > 2. Whom are you trusting for DNS now? Despite some reservations as stated above, I wish your business the very best success. I really like your business model. |
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July 19, 2006: 1:13 pm
We understand that we have to earn your trust. Harder-earned is more deserved. Two points: John Roberts |
chang