Intuit was founded in 1983 by Scott Cook and Tom Proulx in Mountain View, California. It made it’s mark in the software industry with it’s friendly personal accounting tools such as Quicken and TurboTax and it’s small business software Quickbooks. With revenues of over $2 Billion, Intuit is the leader in the personal finance and small business space. According to a 2006 article from USA Today (and there is no reason to believe anything has changed) Quicken has a 70%, Turbotax 79% and Quickbooks 87% market share.

On the other hand, Microsoft has been at Intuit’s Quicken for now on 15 years with Microsoft Money, a similar personal finance tool. Despite those 10 years and tens of millions of dollars of marketing, Microsoft has failed to make even a dent in the Intuit monopoly.

Conventional wisdom would have you believe that anything Microsoft touches turns into gold but this is clearly not the case for Money. The question obviously is why?.

The first reason is that Quicken was able to build a large customer base before Microsoft realized the size of the market. This is important because once a customer is hooked onto a particular data format (needed to move between tax years) then it is very difficult to motivate customers to move to an alternative (a trick that Microsoft uses to this day with MS Office).

Secondly Microsoft had no distinct advantage with control over the channel even though they attempted to give the product away for free with Windows. Intuit had cleverly teamed with AOL to distribute both CD and links into the product through the (then) ubiquitous AOL client. AOL users were a perfect match for Quicken users because they were looking for simplicity.

Thirdly and I will let Steve Bennett state:

Happy users creates dominance and barriers to entry. We have 900,000 QuickBooks customers. For them to switch, it would take more than an equal product or a lower price; it would require a far superior product. Small business people don’t wake up each day and say, “Boy, I’d just love to change my accounting system.” They want time to serve customers.

Ultimately Intuit understood it’s users far better than Microsoft. Intuit was focused on making it’s customers an annuity and so spent far more time on supporting them than Microsoft ever could.  100% of what Intuit does is focus on supporting personal finance, something that Microsoft does less than 1% of their time.

Intuit understood that customers were not looking for software but a way to manage their finances, something that Microsoft to this day does not understand. Microsoft Money Plus 2008 carries the traditional on of software for software sake, rather than a solution for people to understand their finances.

We in the software business should be aware of Intuit’s success… and the irrelevance of Microsoft Money..