If Microsoft were to consider, hypothetically, getting back into the low-end accounting market, what kind of product should it build, Satya Nadella, the vp who heads product development for Microsoft Business Solutions, asked a year ago.
To miss that message would be like saying you can't hear elephants running on a metal roof. Hypothetically, I told him, I'd remember that the thing that end users like the most about QuickBooks, the dominant product, is the thing that accountants hate the most. End users like the flexibility and hate accounting.
The noise has gotten louder as Microsoft revs up the marketing machine for Microsoft Office Small Business Accounting, which is going to be part of the Microsoft Office Small Business Management Edition.
Microsoft has to be in the small business market. Competitors Intuit and Best have talked about their control of the low-end market as cutting off the air supply for Microsoft--that is, those small businesses that migrate from retail products to mid-market products.
The air largely belongs to Intuit, judging from the market share reports in the Intuit financial statements. Peachtree has gotten more specialized and I think that's because, increasingly, there's only room for QuickBooks on the low-end shelves. MYOB seems to be fading--American sales for 2004 were off 4 percent from the year before, which wasn't so great itself. Simply Accounting is solidly entrenched in Canada, but doesn't make much headway down here.
Retail here is a substitute word for low-cost, since the primary distribution channel for SBA will be the Microsoft OEM channel. If you buy Office Pro, you get SBA. That's not a guarantee of success, since a lot of computers came with Microsoft Money installed and it never dethroned Quicken.
We don't know how successful Microsoft will be. Being Microsoft, it will gain market share. We don't know if it has learned from past mistakes. What we do know is that Microsoft's ability to appeal to both small businesses and their accountants will decide the outcome of this battle.
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