People ask me this all the time. Is QuickBooks Desktop dead? Will Intuit discontinue this product soon? For several years now people have convinced themselves that there is no future for this product, in spite of public statements from Intuit that there will always be a desktop QuickBooks product. Let’s take a look at the current state of QuickBooks on the desktop, where I think it is headed, and why I don’t see it going away in the near future.
For the sake of discussion here I’m going to refer to “QuickBooks desktop,” but that actually is a composite of three separate products: QuickBooks Pro/Premier, QuickBooks Enterprise, and QuickBooks for Mac. I’ll make some specific predictions on each of these individually.
This article is part of my series on Intuit and the future of QuickBooks. The articles are:
- Intuit’s Long-Term Vision
- QuickBooks Online Is the Future for Intuit
- QuickBooks Online Accountant Connects Them All
- Why QuickBooks Self-Employed Is Important to Accountants
- Is QuickBooks Desktop Dead? (this article)
Why Do People Think It Is Going Away?
There are a lot of reasons why people are worried about the future of QuickBooks desktop. Intuit clearly states at every opportunity that they believe that their future is “in the cloud.” Not long ago, if you went to the QuickBooks website, it was almost impossible to find even a reference to the desktop product! I’ve also had people come up to me who said that they had “talked to Intuit CEO Brad Smith and he says he has a five-year plan to discontinue the product” (something I’ve never heard from him myself).
In addition, let’s go back to the five key points that I see as Intuit’s plan for the future:
- Working in the Cloud: QuickBooks desktop is, obviously, a “desktop” product, not a “cloud” product. Yes, you can access through the Internet it in various ways, but those all have some significant costs and limitations.
- Mobile technology: It is difficult to connect this easily with mobile devices. Intuit dropped their own mobile integrated product some time ago.
- Data collection: This is a cornerstone of Intuit’s plans for technology advances, but QuickBooks desktop data is not easily accessible to Intuit.
- One-person businesses and contract workers: QuickBooks desktop is not the easiest product to work with. I know that Intuit has said for years now that anyone can run their business with QuickBooks, but we all know it isn’t all that easy for many people to work with, without a lot of help. Hey, that is why people like me are in business!
- Globalization: QuickBooks desktop is limited to the US, Canada and United Kingdom. And I seriously doubt that it will ever be available in any other country-specific version.
Isn’t it clear that this product has no future? Maybe, maybe not…
Follow the Money
OK, so let’s look at revenue for the QuickBooks environment.
Here’s a chart that I showed before in my earlier discussion on QuickBooks Online. It shows that revenue has been increasing over the past few years, it also shows that a significant amount of revenue comes from “attachments.” Intuit depends heavily on the revenue that is generated by their own add-on products, such as QuickBooks Payroll and QuickBooks Payments.
Now let’s throw in the revenue generated in the desktop environment:
Several key points that should be obvious here:
- When you include consideration for “attachments” in the revenue stream, the desktop environment is generating significantly more revenue than the online market.
- Another very interesting point is that revenue for the desktop increased in fiscal year 2016 over the prior year.
Folks, I can’t think of clearer evidence than this. How could Intuit turn away from that significant revenue stream? They do have a history of cutting adrift products that don’t perform well or that they don’t think fit their business model, but I can’t see them cutting off QuickBooks desktop, overall.
Intuit has known about the significance of the revenue stream of “attachments” for a long time now. I do, however, think that they were caught by surprise by the growth of desktop revenue this year.
They also see this revenue stream as being fairly steady for the near future, as they show in this graphic from the Intuit Investor Day presentation in 2016:
Note that “SBG” is “Small Business Group” and “TT” is TurboTax.
Clearly Intuit believes that their future is in the online marketplace. All of their research shows that this is where the world should be heading. And for several years now the online products have been the focus in new development. However, the desktop product continues to address businesses not served by QuickBooks Online, those that have complex business needs.
How long will this last, though? That is hard to predict. Fully 80% of the new customers to QuickBooks Online are first time users. These people expect to be online and using their mobile devices, and that isn’t the desktop product. Existing QuickBooks desktop users aren’t moving over to QuickBooks Online rapidly. There are several reasons for this, in my mind:
- QuickBooks Online doesn’t have all the features that QuickBooks desktop contains. People don’t want to give up features like sales orders, assembly builds, backorder management and more. However, Intuit is continuing to expand the online product.
- Many desktop users are worried about data security “in the cloud.” However, the younger generation of business owners are less concerned about this because everything they do is mobile and in the cloud. They don’t see it as a drawback.
- I find that many desktop users just aren’t comfortable with working “in the cloud.” I expect that Intuit’s plan is to expose desktop users to online services, such as moving QuickBooks Payments to a cloud-based service that integrates with the desktop product, getting people incrementally comfortable with the advantages of being online.
OK, so I’ve been talking about “QuickBooks desktop” collectively. Now let’s break it down into the component products. I think that each of those products has a different future. Note that when Intuit shows revenue and user information in their charts they don’t usually provide us with separate figures for QuickBooks Pro/Premier, QuickBooks Enterprise and QuickBooks for Mac.