In one of three other mid-range web host acquisitions this year, NationalNet announced that it has purchased Mach10, a Texas-based web host company that serves the adult entertainment industry.
According to Morgan, his company intended to purchase six other companies this year, but only managed to get four. Although in 2004, Morgan and his team expect to buy up another six medium-sized web hosts.
The reason for the buying spree, says Morgan, is that as the industry consolidates, the mid-range web hosts are increasingly having trouble staying afloat and are perfect acquisitions for some of the bigger players like NationalNet and others.
"This market is such that it is squeezing out the middle players," Morgan told XBiz. "The middle size guys can't make any revenue, as opposed to the big ones who have their own staff."
According to Morgan, the acquisition of Mach10 is a feather in NationalNet's cap after nearly a year of trying to buy up what Morgan refers to as one of his better competitors.
"I finally convinced them to sell," he told XBiz. "They have always offered good service and good support. The owners had an opportunity to do other things and were looking to turn over their web hosting company to someone reliable. The one thing about this business is that when you own a small web hosting company, you're working 24-hours per day. When there are problems in the middle of the night, they call you. If you don't have the staffing capabilities to hand it off when there is a problem, then it's tough."
Morgan acquired NationalNet in 1998 after he made the switchover from running adult sites. His original intention was to buy a web hosting company so he could host his sites for free.
"We had no intention of getting into hosting," Morgan said. "But we put together a good network over time and before you knew it we were in the hosting business. We started learning the business and getting better and better until we decided to concentrate on hosting full-time."
Among some of NationalNet's high profile adult clients are Consumption Juction, Platinum Bucks, and many others.
When asked what sets NationalNet apart from the other successful web hosts in the adult space, Morgan told XBiz that his focus has always been on customer support as the defining quality of a good web host.
"There are very few people who truly own and operate their own data center like we do and who staff it 24/7," Morgan said. "It is my internal policy that if that phone rings more than three times and nobody picks it up, then I'm going to. We are fanatical about customer service. In my opinion, if that phone is ringing, then there is somebody out there who needs you."