The Air At the Low End

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Now the battle has begun-the battle for command of the low-cost accounting software market. The battle really started months ago since there was nothing too secret about the launch of Microsoft's Small Business Accounting package, except the exact launch date, which turned out to be September 7.

The battle pits Microsoft's Small Business Accounting versus QuickBooks versus Peachtree. Why is this important to anybody other than the small businesses that purchase these less-than-full-featured products?

Obviously, it's a big deal because Microsoft brought in its top guns, chairman Bill Gates and CEO Steve Ballmer, to help launch SBA.

Partner Insights

The battle is a lot more than just trying to sell products to small businesses. For a company the size of Microsoft, the amount of revenue it might get from SBA over the next five years isn't that important. The battle is about the hearts and minds of the small business owners.

Tax, Tax, and Tax

That headline may describe how many people feel about federal and state governments-there's no end to the number and amount of taxes.

But it also sums up this special Tax Edition of Accounting Technology. The usual broad line up of feature stories makes way for a look at what is in store for tax software for tax year 2005. After all, for many practitioners tax preparation services produce a majority of their revenue. This issue looks at the trends in the market and at the enhancements that vendors are making to their product lines.

But the magazine also looks at a new generation of analytical software products in "Sorting Out Data." Vendors are betting that practitioners will want to use these tools to provide more insight into their clients' data.

For the last few years, rival Sage Software has talked about the ability of Sage and Intuit to cut off Microsoft's air supply. That refers to the domination of the low-end market by Intuit's QuickBooks and Sage's Peachtree. Although Intuit has, by far, the larger installed base, both QuickBooks and Peachtree customers have been a source of business for mid-market companies as small businesses become bigger. The ability to move Peachtree customers to MAS 90 and other Sage products, for example, was critical to many VARs during the soft market from 2000 through 2004.

Microsoft is going for something more, however, as shown by the fact the SBA is tied to the Microsoft Office suite. Microsoft is looking for brand loyalty and the future revenue stream for small businesses across a wide spectrum of desktop applications for the foreseeable future.

Intuit and Peachtree are not sitting back. Intuit is readying a new product that answers some of the complaints accountants have had regarding QuickBooks, especially in the area of an audit trail. Sage is ramping up a new division to push Peachtree and related small business products.

CPAs, of course, are important in this effort. Microsoft is starting to build its accountants network. Intuit has a ProAdvisor program, while Sage has its Sage Accountants Network, all designed to get accountants to refer the vendors' products.

But what accountants need to remember is that what they value in an accounting program is not necessarily what small business owners care most about. While accountants want control, business people want ease of use. The trick for the players is to try to balance these sometimes-conflicting needs as they vie for dominance.

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