04-Aug-01
Microsoft Guns for Intuit

A couple years ago I predicted Microsoft would buy accounting software publisher Great Plains, and this would begin a bloodbath for publishers of accounting software. Microsoft would soon "integrate" Great Plains into features of it's other products, progressively locking out competitors. In December 2000, Microsoft made that buy (my article).

I also predicted that soon after the Great Plains buy, they would announce a low end accounting package to fill the gap between Great Plains and Microsoft money. In the third week of July 2001, that announcement was made. Currently called "Blue", it will be named Small Business Manager when released.

Microsoft Great Plains also announced all the Great Plains software will be completely rewritten in Microsoft's C# (C Sharp) language so it can be tightly integrated into Microsoft's .NET initiative. Microsoft Money will soon join the .NET team as well.

Intuit will be a priority target. Why? A few years ago Microsoft agreed to buy Intuit. They had a plan to "collect a vig" (a bookies cut of a bet) on every electronic financial transaction made. They wanted Intuit because of it's extensive electronic payment agreements with banks and other financial institutions.

The Department of Justice protested, and Microsoft went into court loaded for bear. They swarmed the court with lawyers and subpoenaed the business plans of their competitors - then disaster struck - they failed to file a response to a court inquiry on time, leaving them at the mercy of a court that looked real short on mercy. The deal had to be abandoned.

Now .NET, an even more aggressive program, has replaced the "vig" plan. Intuit's financial agreements now stand in Microsoft's way.

What it all means to your business:

• Microsoft has announced they will grow the $250 million Great Plains business to $10 billion inside of 10 years. Obviously they intend to destroy most other accounting software vendors in the process - there simply isn't going to be that much growth in accounting usage. They will do this by tightly integrating MS Great Plains with features of .NET and other Microsoft products, while locking other vendors out,

• If you are using any other Windows based accounting package, you face the probability of having to move either to Microsoft's .NET products and accept Microsoft's control of your business (see .NET), or move to a Unix/Linux accounting package (yes, you can still use Windows on your workstations). We strongly recommend this second course so you can retain ownership control of your business data.

• If you're using Solomon accounting, you'll be forced to make that move sooner than most because Solomon was included in the Microsoft buy. Microsoft isn't going to continue supporting two major packages. There will soon be strong pressure to migrate.

• Intuit, the primary publisher of low end accounting software will suffer intense damage and loss of most of it's market to Small Business Manager and Microsoft Money. You say, "It just can't happen! Intuit is way too popular"?
  • "WordPerfect will never be replaced, it dominates the market".
  • "WordStar will never be replaced, it has market dominance".
  • "Lotus 123 will never be replaced, it has no competitors".
  • "VisiCalc will never be displaced, it has market dominance".
  • "dBase will never be replaced, it owns the database market".
  Get the point? Each of these packages had total market dominance, and each was overthrown at a platform transition. dBase, VisiCalc and Wordstar at the transition to the IBM PC; WordPerfect and Lotus at the transition to Windows. Microsoft's intent is to transition the Windows world to .NET.

• Microsoft will "help" Intuit and other Windows accounting vendors to transition to .NET - just like they "helped" WordPerfect and Lotus transition to Windows. In other words, they are cooked.

What's to stop this from happening? Intuit can't do much, they're totally dependent on Microsoft. All the other Windows accounting publishers are way too small to resist Microsoft in a meaningful way.

It looks like, in the end, Intuit's survival depends on the Department of Justice and anti-trust action brought by other parties

- Andrew Grygus