Yahoo ends usage charges on small business sites

By Eric Auchard

SAN FRANCISCO (Reuters) - Yahoo Inc said on Wednesday it is offering unlimited Web site storage and data transfers for small-business Web site owners for a flat rate of $11.95 per month, eliminating key inhibitors to broader usage.

Yahoo, the largest U.S. provider of Web hosting services for small businesses online, counts more than 1.5 million customers, which one analyst said represents about one-third of U.S. small businesses with Web sites.

"This will really increase usage," said Sanjeev Aggarwal, vice president of infrastructure and software at AMI Research, a market research firm that specializes in how small businesses use information technology.

Among an estimated 6 million U.S. small businesses, about 75 percent have some form of Web presence, according to AMI.

For a decade, Yahoo and other providers of Web site hosting services have charged for network usage and data storage, creating a trade-off for many small businesses who stood to pay hefty additional sums the more successful their sites became.

While a lesser-known aspect of Yahoo's business, small business hosting services support many of the store-fronts that are featured on eBay Inc and Amazon.com, the Web's two top e-commerce sites for small businesses.

The new Yahoo Web Hosting service includes unlimited hard disk space, data transfer and e-mail storage for $11.95 monthly. Previously, Yahoo offered three service tiers starting at $11.95. Two higher-priced tiers of $24.95 and $39.95 a month had offered larger amounts of storage and data transfers.

"It is probably more expensive now to manage this bandwidth usage, data storage and the billing related to that, than it is to offer these services on an unlimited basis," Aggarwal said.

By contrast, a rival Web hosting provider such as GoDaddy.com charges hosting fees of anywhere from $3.99 to $14.99 but puts limits on disk space and data transfers. The $14.99 plan offers a small business site 200 gigabytes of storage and 2,000 gigabytes of data transfers monthly.

Microsoft Corp, which last week said it planned to make an unsolicited bid worth $45 billion to acquire Yahoo, has been playing catch-up in the small business hosting market.

Its Microsoft Office Live offering also has three tiers of service, including a free, entry-level offer with 500 megabytes of storage and 10 gigabytes of data transfers a month.

A key difference of Microsoft's offering is that it bundles in a set of Web-based business software programs for fees running up to $39.95 a month.

(Editing by Braden Reddall)