QuickBooks Desktop has a large and very loyal following, but since Intuit promotes QuickBooks Online so heavily, people have been nervous about the future of QuickBooks Desktop. However, I believe that QuickBooks Desktop is Alive and Well, and it will continue to be supported by Intuit. Let’s take a look at why I’m feeling so positive about this product line.
In this article I’m going to be providing information based on Intuit’s financial statements for Fiscal Year 2017, their Investor Day 2017 presentation, and an extensive interview I had with Todd Stanley, Intuit Vice President and Segment Leader for the QuickBooks desktop ecosystem.
Supporting QuickBooks Desktop Makes Financial Sense
Earlier this year, in my article titled Is QuickBooks Desktop Dead? I pointed out that the QuickBooks Ecosystem outperforms the QuickBooks Online Ecosystem by a significant amount.
In this case, when I refer to an “ecosystem” I’m talking about the revenue generated by the accounting product itself, along with “attachments” such as related Intuit payroll products, QuickBooks Payments, and other attached services or products. You can’t look at just the revenue generated by the accounting software itself, you must also look at revenue that comes from the ancillary products and services that ride along with the accounting product.
Here’s a look at the revenue generated over the past four years, based on Intuit’s financial statements for Fiscal Year 2017 (plus some from last year’s presentation).
In the above chart:
- “QBO” is QuickBooks Online subscription revenue.
- “QBO + Attach” includes QuickBooks Online subscription revenue plus revenue from online payroll, online payments, and other online services.
- “QBDT” represents revenue from unit sales of QuickBooks Pro and QuickBooks Premier, along with subscription revenue from QuickBooks Enterprise, QuickBooks Pro and Premier Plus, and QuickBooks Accountant.
- “QBDT + Attach” includes “QBDT” along with revenue from desktop payroll, desktop payments, desktop supplies, and revenues from the ProAdvisor desktop plan.
A couple of things are clear from this chart:
- QuickBooks Desktop generates more revenue than QuickBooks Online. Even looking at just the accounting products themselves, desktop has a small lead over the online product.
- When you add in the revenue from “attachments,” the QuickBooks Desktop ecosystem generates almost twice as much revenue as the QuickBooks Online.
- Revenue for QuickBooks Desktop (with or without attachments) has been growing over the past three years.
This next chart comes from the Intuit 2017 Investor Day presentation. While their intent was to show their projections for revenue growth in their online products worldwide, it is interesting to note that they are expecting there to be continued strong revenue generated by the desktop products over the next several years.
Given these figures, how could someone think that Intuit would turn away from such a significant revenue stream? It makes perfect sense to me that Intuit would continue to support the desktop product.
However, is there really a commitment to supporting and developing the product?
A Shift in Focus, and Staffing
Even though the QuickBooks Desktop ecosystem is generating a significant amount of revenue, Intuit could just sit back and let the product languish. Drop it from their websites, make it hard to find, stop development of new features, ignore existing problems. As it stands now, the desktop product is feature-rich and fulfills the needs of many businesses. Much of that revenue stream would still be generated, and the product could die off over time while the online products take over.
Several years ago, I was afraid that this was the course that Intuit was taking with the product. Engineering staff was dwindling, it was becoming hard to find the product on the Intuit websites, Intuit introduced their QuickBooks Connect trade show and excluded the desktop product. Rumors circulating at the 2013 Sleeter Conference (now Accountex) said that Intuit was planning on ending the desktop product in 5 years (that would be in 2018!).
Fortunately for the QuickBooks Desktop community, Intuit is making a new commitment to the desktop product.
I spend a lot of time trying to understand Intuit’s corporate structure. It can be confusing, and understanding it is complicated due to how Intuit seems to continually reorganize and shift people between different units. One thing has been apparent over the past few years, though. There hasn’t been good representation of the QuickBooks Desktop ecosystem at the higher executive level at Intuit. But this is changing.
As a part of Intuit’s recognition that QuickBooks Desktop is still important to their customers, and to Intuit’s financial health:
- Intuit appointed Todd Stanley to be the Intuit Vice President and Segment Leader for the QuickBooks desktop ecosystem. Todd is responsible for all aspects of the QuickBooks Desktop ecosystem, including QuickBooks Pro and Premier, QuickBooks Enterprise, desktop payroll, desktop payments, QuickBooks Point of Sale, and desktop supplies. This brings an executive-level focus to QuickBooks desktop.
- Intuit has decided to look at the QuickBooks Desktop ecosystem on a 10-year planning horizon. This shows a long-term commitment to the product.
Todd has been with Intuit for 21 years now, working with multiple products over the years, including TurboTax and Quicken. I was fortunate to be able to interview Todd at Intuit’s offices in Mountain View, and it is clear that he believes that there is a long-term future for QuickBooks desktop.
To better understand the customer base, Todd spent time talking to companies using QuickBooks desktop products, as well as accounting professionals who support QuickBooks, and found that:
- QuickBooks Desktop has an incredibly loyal customer base.
- Larger businesses using QuickBooks desktop, in general, tend to be fairly complicated. They usually had specific reasons to be on this platform. They all knew about QuickBooks Online, but for a variety of reasons the desktop was right for them.
- A significant number of these desktop customers had significant issues with the product. Things like data corruption and installation problems, which would cause downtime.
I think that any accounting professional that spends a lot of time studying this market, working with and supporting QuickBooks desktop customers, would agree. This has been obvious to me, and most QuickBooks ProAdvisors, for a long time!
So, what does this mean? Given that there are still millions of active customers using QuickBooks desktop, and Intuit has shifted to look at these products on a 10-year horizon, Todd told me that:
- Intuit will be increasing the staffing levels for desktop products, both in management and engineering. Staffing levels weren’t really adequate over the past few years to do the best job. It will take time to ramp up staffing, but the commitment is there for the long term.
- The desktop management and engineering staff will be provided with the resources they need to support, fix and improve the products.
- There will be a focus on the basics of the products. Problems with file corruption, difficulties in installation, resolution of existing bugs, all have to be the highest priority. Sure, you need enhancements, but they must fix the basic problems first.
- There will be new features, but most of the significant new features will be implemented in QuickBooks Enterprise. There will be improvements in QuickBooks Pro and Premier, but these will tend to be smaller improvements in response to user requests, rather than major new features.
- QuickBooks Desktop users use add-on products to a higher degree than QuickBooks Online users, mainly because the desktop product tends to be used by more complex businesses. Intuit wants to continue to support desktop add-on developers.
Note that all this doesn’t guarantee that a specific product won’t be retired. If a product just doesn’t make sense from a business standpoint, it could be sunsetted. For example, as I mentioned earlier this year, QuickBooks for Mac will be retired when the current release reaches its end of life in 2019. On the other hand, some products that we thought were finished will get a new life, such as QuickBooks Point of Sale, which was revived earlier this year.