Choking Off Microsoft?

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The importance of the battle for the low-end accounting software market was outlined by Best Software at its Visions reseller conference. Best introduced the concept of choking off Microsoft Great Plains' business from the bottom.

Best pictured itself, with Peachtree, and Intuit, with QuickBooks, as having a feeder system that provides a stream of customers who can migrate to higher-end products. In Best's case, the migration is to MAS 90/200, while QuickBooks users are expected to move to the company's new QuickBooks Enterprise Solutions. The theory is that Microsoft does not have such a feeder system for its Great Plains line, whose low end is currently the Small Business Manager. SBM is a much higher product in functionality and price than either Peachtree or QuickBooks. Similarly, Accpac has users on Simply Accounting who can move up its line, although not in great numbers in the United States.

At stake here are the hearts and minds of smaller businesses. Many have outgrown, or will outgrow, low-end products. Intuit claims 259,000 mid-market customers use QuickBooks, while Peachtree has 151,000 users in the same market. These users, in theory, should have moved to a more robust product, but have resisted, probably because of the cost or difficulty in conversion and retraining.

Partner Insights

Best's parent, the Sage Group, has already had success with Peachtree upgrades. In its last financial report, it said 31 percent of all new MAS 90 sales came from such migrants.

For the moment, Microsoft has no visible way of getting a low-end product into the market quickly, short of buying one, and its choices for acquisition have nowhere near the market recognition of either Peachtree or QuickBooks. (We have to assume that since the Department of Justice would not let Microsoft buy Intuit in 1993, it won't do so now. Also, with Microsoft buying Navision, it's hard to believe that the European Union will let it buy Sage.)

Certainly, Small Business Manager is not inexpensive enough to serve as a feeder product, and right now, it doesn't look like the market is leaping to accept it. Microsoft seems to recognize it has to go back and do the homework it should have done with this product to get anything near the acceptance it originally anticipated.

Both Intuit and Best would seem to have a much bigger advantage for converting those mid-market customers who are still using retail software. After all, they have the names and addresses of these more than 400,000 users. Microsoft does not, and everyone knows it's much easier to convert an existing user than to snare new ones from the competition. Who could it buy? Possibly MYOB or Softline (to get Pastel)? Or even Accpac to get Simply? Write off another failure like Finance Manager? Enhance Money?

In March, Doug Burgum, president of Microsoft Great Plains, said that the company must go further down-market, although it's not a near-term goal. But the pressure exerted by Intuit and Best may just move Microsoft's low-end needs up the priority list.

It's always dangerous to count Microsoft out of anything. Still, you can't grow if your air supply is choked off.

Robert Scott -- Editor-in-Chief

The Art of the Cross-Sell

With the market for accounting software nearing saturation, vendors are training resellers in the subtleties of the cross-sell.

Can VARs become jack-of-all-trade suppliers for applications, ranging from accounting to POS to supply chain management to HR and payroll? Senior Editor Richard McCausland talks to both vendors and resellers about this ambitious undertaking.

McCausland also examines one of the more lucrative vertical markets in "Distribution Software: ROI Is King." What are accounting software publishers doing to accommodate distributors' needs?

Meanwhile, Associate Editor Carly Lombardo examines whether account aggregation is in big demand. Financial services providers believe clients want to aggregate their financial data on one Web site. Do they?

Practice Management Software remains an important tool for running a CPA firm efficiently. Reviewer Tom Davis looks at the way these packages can help firms achieve greater profitability.

Finally, the magazine discusses the old question of what electronic tax forms offer. Just how different are they from each other and are there really new developments in this market?

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