We all know that QuickBooks Online is the focus for Intuit moving forward. If you go to Intuit’s site for QuickBooks it is hard to find information about any of the desktop products. However, QuickBooks Online doesn’t yet come close to providing the features that are available in QuickBooks Premier and QuickBooks Enterprise Solutions. Does Intuit’s focus on QuickBooks Online mean that businesses who rely on QuickBooks desktop products are going to be left behind? I’ve been giving that some thought lately, here’s what I’ve come up with.
There Will Always Be a QuickBooks Desktop, but…
Intuit has been telling us for some time now that QuickBooks Desktop is not going away. Last November I asked Dan Wernikoff (the Intuit Senior Vice President with responsibility for all things QuickBooks, and more) if the desktop product was going away and he said (in my article on Intuit and the Future of QuickBooks Desktop) :
“I can’t see a time when we are not doing a desktop release”
Since that time, though, we can see that the majority of Intuit’s efforts have been focused on QuickBooks Online. Certainly from the marketing and research standpoint. While Intuit is still selling a lot of units of QuickBooks desktop, is the writing on the wall? Is the desktop going to wither away?
If you look at the transcript of Intuit’s fourth quarter 2014 report to investors you can see why Intuit is pushing towards QuickBooks Online:
- According to Neil Williams, Intuit CFO, QuickBooks Online generates more that $800 in annual revenue per customer, while QuickBooks Desktop generates less than $500 per customer.
- Brad Smith, Intuit CEO, said that QuickBooks Online is a global platform, which significantly increases their total addressable market.
- QuickBooks Online enables the “seamless purchase of additional services”, such as payroll and payment solutions. Both of these areas grew significantly when compared to the prior year, and a lot of that growth can be attributed to the growth of QuickBooks Online.
The best way to look at this is another quote from Neil Williams:
“We’ve described how the cloud is a better experience for customers. It’s also a better business model for our shareholders since the lifetime revenue of QuickBooks Online customers is greater than that of desktop customers…”
That is pretty clear. Intuit is a publicly traded company, and they have a requirement to do what is best for their shareholders. Their research (the future of small business reports and the cloud will transform small business study) show that Intuit firmly believes that “cloud” and mobile technology will dominate the market soon, and they are focused strongly on being the top company in this area.
Moving QuickBooks Pro and Premier Users to the Cloud
I’ve come to the conclusion that, at least for the moment, Intuit really, really wants all Pro and Premier users to move to QuickBooks Online.
Well, duh. That shouldn’t be a shock to anyone. It has been obvious for some time now. QuickBooks Online is about all you hear them talk about. Go to http://quickbooks.intuit.com/ and everything is focused on the online product.
But does that mean that QuickBooks Pro and Premier are going away soon? And where does that leave the current desktop users who don’t want to move to the cloud, who find that QuickBooks Online doesn’t have the features that they already have in their desktop product?
Again relying on statements by Brad Smith in Intuit’s 4th quarter financial report:
“We are making important product changes to continue to delight our QuickBooks desktop customers, many of whom will be cloud customers in the future.”
“Our goal is to attract them with a compelling online experience and incentives to move to the cloud. To that end, we are strengthening our desktop products beginning in 2015 by delivering ongoing releases to continuously improve the product experience, support operating system updates, and provide access to connected services.”
My interpretation of this (along with other statements made in their presentation) is:
- QuickBooks Pro and Premier aren’t going away soon. There isn’t any indication of an “end of life plan” to entirely retire the products. Intuit still sells a lot of units of the desktop product, and they recognize that their existing desktop user base represents a significant source of income. A lot of those users aren’t ready for the cloud, and Intuit wants to hold on to them.
- However, I expect most of the new product development to be focused on QuickBooks Online. That doesn’t mean that the desktop is frozen, but I wouldn’t be looking for many major new features in the desktop. In fact, if you look at the 2015 release you can see that a lot of the changes are smaller incremental changes, for the most part, improvements that users have been asking for.
- Intuit is going to expose desktop users to more online services. One reason that people don’t want to leave the desktop (amongst several) is that they aren’t comfortable with online services, the “cloud”. Expect to see more features that connect to QuickBooks desktop products and that rely on the cloud, such as online payroll products and payment solutions (and probably others). Intuit will expose you to the cloud, get you comfortable with it, then convert you to QuickBooks Online at some later date.
- Intuit is going to continue to improve QuickBooks Online to include features that desktop users want, such as (perhaps) increasing the job costing and inventory features, improving form customization, and other features. Some of this will be in-house development, some will be acquisitions of other companies, some will be opening things up to third party developers to fill gaps.
This is a shift in how Intuit is presenting things from what they were saying last Fall, in my opinion. Before, they mostly said that the cloud was the future, but that QuickBooks Online would never be as feature rich as QuickBooks Desktop. No real talk about advances in the desktop product. Now I’m hearing them make a stronger commitment to support QuickBooks desktop products and a realization that they do need to cover more and more of those desktop features that are missing from QuickBooks Online.
It all sounds good, but we’ll have to see the details of how this works out. Can they pull it off? Can they make hard core desktop users (and accounting professionals) become more comfortable with the cloud? Can they come up with an online product that can do what QuickBooks Pro and Premier does, at least for the most part?
But What About QuickBooks Enterprise Solutions?
Intuit tends to talk about “QuickBooks Online” vs. “QuickBooks Desktop”, but I think that there are actually three categories to consider – Online, Pro/Premier and Enterprise. Don’t lump Pro/Premier in with Enterprise when talking “desktop”. QuickBooks Enterprise Solutions is being treated differently than QuickBooks Pro and Premier. When Intuit talks about the target market for QuickBooks Online they are looking at the smaller businesses – those that are best served on the desktop by QuickBooks Pro and QuickBooks Premier. This is the area that the project the greatest growth in as a part of their research.
QuickBooks Enterprise Solutions serves a different market, and therefore should be treated differently. What will Intuit do with QuickBooks Enterprise? I talk about that in my next article.