The most telling phrase about Intuit's plans for mid-market accounting software is displayed on the Investor Relations portion of the company's Web site.
The phrase, posted on the PowerPoint slides that were used as part of the company's annual Investors' Day presentation, was used more than once: "Disrupt the high-priced alternative."
There were few new details in the spoken comments by CEO Steve Bennett and VP and QuickBooks GM Brad Smith. One slide showed the price of QuickBooks Enterprise Solutions going from a flat $3,500 in 2005 to a range of $3,500 to $6,000 for the 2006 version of Intuit's mid-market accounting software entry. The range incorporates tiers for different numbers of users.
Add on a change in the over-taxed QuickBooks database engine to an Intuit implementation of Sybase's iAnywhere, and you have an increasing threat to traditional mid-market players such as Microsoft Business Solutions and Sage Software.
The idea of such disruption is hardly anything new. It is a recognition of a historical trend of increasing price performance for technology products and consciously taking advantage of the process. Such changes can produce price collapses among higher-priced products.
Desktop tax software caused the market for mainframe-based maintenance processing to collapse so rapidly that the vendors could not keep pace. The same thing could happen in accounting software.
Doug Burgum, head of Microsoft Business Solutions, has said that is easier to go up market than down. That's because it is easier to increase revenue to move up stream than it is to cut costs in order to come down. Burgum says that the mid-market offerings represent a similar threat to the enterprise vendors.
Intuit founder and chairman Scott Cook points out features introduced with QB 2006 for product-based users. "We have massive product functionality, inventory functionality, and warehouse functionality. There is functionality that is not found in products that cost thousands of dollars more," says Cook.
That is the challenge that Intuit is throwing down.
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