Microsoft Revamps its Money Offerings

Microsoft released a new version of its market-lagging personal finance software, including gambits to make it easy for Quicken customers to switch.

This is the first major product upgrade in 13 years and Microsoft said it’s been rebuilt from the ground up. The new product, available in four editions for consumers and small businesses, features tight integration with MSN Money, Microsoft’s online financial Web.

Microsoft doubtless has eyes on Intuit’s profits in the personal and small business finance segments. Intuit makes Quicken personal finance software and QuickBooks for small businesses. Mountain View, Calif.-based Intuit reported that, at the close of fiscal 2004, QuickBooks revenue grew 12 percent over the previous year, to $272.6 million. Its GAAP net income was $317.0 million, or $1.58 per diluted share.

Microsoft has a long history of chasing Intuit. In 1994, it tried to buy Intuit for $2 billion, but the merger was blocked by the U.S. Department of Justice. At the time, according to the DoJ’s press release, Quicken had almost 70 percent of the market, while Microsoft’s Money garnered about 22 percent. “Allowing Microsoft to buy a dominant position in this highly concentrated market would likely result in higher prices for consumers who want to buy personal finance software and would cause those buyers to miss out on the huge benefits from innovation,” the DoJ stated at the time.

So now to nibble into Intuit’s market share, Microsoft has made it as easy as possible to buy and use the application.

First, Microsoft Money 2005 can be purchased as a download from a special page on Microsoft’s site; at press time, the application didn’t appear on the Microsoft Downloads site but presumably, it will be available there and also within the Windows Marketplace.

Microsoft also sought to eliminate the biggest barrier to switching: the need to re-enter all the information a user may have spent years putting into a financial application. The application can import financial information that’s online from banks, brokerages and credit card companies nationwide. It can also import from Quicken itself, thanks to a converter tool that lets users transfer their historical data into the new application.

Jupiter Research analyst Joe Wilcox said that Microsoft may benefit most from Money 2005’s integration with MSN Money tools and content on the Web site. A recent Jupiter survey of consumers found that online bill payers are more than three times as likely to use the Web to do high-value activities like applying for loans and transferring funds. They’re almost four times as likely to open banking or investment accounts online. Jupiter Research and internetnews.com are owned by the same corporation.

Besides Microsoft’s software revenue and the potential for forging relationships with financial institutions, Wilcox said,” If people use MSN to do financial research, then they’ll consume advertising, and they may use paid search. There are lots of trickle-down benefits.”

Money 2005 is available in three consumer editions ranging in price from $29.95 to $79.95; Money 2005 Small Business is available at an estimated retail price of $89.95.

According to JupiterResearch, buying software directly from vendors such as Microsoft or Intuit was by far the method preferred by small businesses; the second preferred method was going to a superstore, preferred by 34 percent.