QuickBooks

QuickBooks Desktop Is Alive and Well

Written by Charlie Russell

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).

QuickBooks Desktop Is Alive and Well

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.

QuickBooks Desktop Is Alive and Well

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:

  1. QuickBooks Desktop has an incredibly loyal customer base.
  2. 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.
  3. 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.


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About the author

Charlie Russell

Charlie Russell has been involved with the small business software industry since the mid 70's, and remembers releasing his first commercial accounting software product when you had an 8-bit microcomputer with one 8 inch floppy disk drive. He has a special interest in inventory and manufacturing software for small businesses. Charlie is a Certified Advanced QuickBooks ProAdvisor with additional certifications for QuickBooks Online and QuickBooks Enterprise, as well as being a Xero Certified Partner. Charlie started blogging about QuickBooks in 2008 (Practical QuickBooks) and has been writing for the Accountex Report (formerly the Sleeter Report) since 2011. He retired from accounting and QuickBooks activities in early 2018.

Visit his CCRSoftware web site for information about his QuickBooks add-on products. He is also the author of the California Wildflower Hikes blog.

19 Comments

  • I could almost believe this was an April Fools article. Intuit going back to the basics? Fixing Data corruption? (Hasn’t that been on every customer’s wish list since the product was created? Why does Intuit care now?)

    I’m sure Intuit wants their customer base to believe they care about what their customers care about. A commitment to actually do something useful? I’ll believe it when I see it.

    By the way, to answer your question “how could someone think that Intuit would turn away from such a significant revenue stream?” Uber. A company that lost more in a year than any public company, yet maintained a $50B valuation. Wall Street values growth more then profits and more even than revenue. From your graphs, QB Online has much faster growth than QB Desktop. For the executive suite – rewarded by stock valuation often more than by salary or bonus cash, growth is a brighter and shinier goal.

    I really hope you’re right and Intuit isn’t just blowing (more) smoke.

    • I used to write April Fools articles, but people got mad at me because they thought they were “real” articles…

      Actually, if you look “under the hood” at the last several years of QuickBooks desktop updates (as well as at my articles), you’ll see that Intuit has been making an effort to resolve basic problems, security issues, reliability and corruption issues. That doesn’t mean that they’ve fixed EVERYTHING, but the effort has been there. What is changed now, apparently, is that (1) there is a stronger commitment to this at a higher level, and (2) there is more investment in personnel and resources to address these things. At least as far as I can tell.

      I wouldn’t compare Uber with Intuit – two companies that have very, very different approaches to things, and philosophies. And Uber is a relatively new startup, really, where Intuit is not.

      However, you do point out one trap that I tend to get into. I’ve been involved with small businesses all my professional life. I tend to think from the standpoint of a small business. A large corporation like Intuit is very, very different than that, and what would make sense to ME doesn’t necessarily apply to THEM. Even though their PRODUCTS are aimed at small businesses, they are NOT a small business themselves. Life is very different for a major corporation.

      All of what I wrote here is my opinion – my last article for Accountex Report, a last look at Intuit. I could be really off base. We’ll just have to see.

  • Good summary Charlie. Like you, I was very hopeful after hearing from Todd Stanley. The one thing area that I continue to be concerned about though is the POS desktop. Despite assurances during the IRP meeting, I have since found that the POS add-on SDK is not working on the current version of QBPOS. I hope that changes soon.

    Ernest

    • Thanks, Ernest. You know QBPOS way better than I do, it isn’t an area that I’ve ever spent time on. Best I can say is that there appears to be renewed interest in QBPOS from Intuit. You’ll have to see how they address any SDK issues – compatibility with legacy SDK’s is a complex and difficult issue when you want to advance a product.

  • Thank you Charlie for your articles. I have always found them interesting and helpful, even if they were not of immediate or direct relevance to the software I was using. Best of luck for the future.

  • Interesting take, Charlie – any idea about the revenue breakdown between QB Desktop vs QBES? Particularly since the subscription model change?
    Anecdotally some of my clients weren’t re-upping every year but now they need to.

    • Thanks, Greg. I would really, really like to see a breakdown of revenue generated by specific products (online as well as desktop), but Intuit doesn’t generally publish that level of information. They do give some idea of volume between QB Online and QB Self Employed, but never the desktop.

      I think that it is very likely that revenue from Pro and Premier is dropping, as the number of users decreases. I think that it is very likely that revenue generated by Enterprise is increasing, although I doubt that much of that increase is coming from an increase in user counts. And, as I understand it, Enterprise subscription rates are going to increase soon (if they haven’t already, I’m not tracking that). However, this is speculative on my part (although there are a lot of hints to be found if you dig in, and ask around).

      Clearly the future for QB Desktop is in QB Enterprise. That is where the significant new development is focused. And that product is very, very far ahead of where QB Online hopes to be.

  • Charlie, another great insightful article as we in the community have come to expect from you.
    I think your opinion/analysis is quite astute and things will likely develop as you suggest for QBD.
    Personally, I’ll miss your articles and am sorry to see you go but understand its time to move on.
    Thanks for the mention, stay well, hopefully we’ll catch up again at some future QB Connect.
    Cheers, John

  • Can you load QB Premier 2018 for a single user on multiple computer to use only on one computer at a time? I like to load in the office and on my laptop so I can work at home when needed.

  • We have very recently moved from Quickbooks (QB) Desktop Pro, to QB Online, something I’ve fought hard against doing for the last few years. We mainly did it for 3 reasons…

    1) it’s become increasingly difficult for us as small business, to manage the security of our internal networks which are also connected externally.
    2) Quickbooks Online stores all our data in the cloud, allowing this data to be connected to a growing range of very powerful third party cloud-based applications that allow us to simplify our business processes, potentially allowing our business to become much more productive, and compete more effectively with larger businesses. These third party software applications are generally priced on a monthly basis by the number of users, allowing us to experiment with, and then use very powerful commercial software applications at a cost that is commensurate with the size of our business. These are the sorts of software applications that usually would have been priced well beyond the reach of a small business like ours, had we bought them to install and use on our local network.
    3) Our external accountants were unable to buy an up to date copy of Quickbooks Desktop last year, to allow them to produce our annual accounts (The don’t generally use Quickbooks much). We also couldn’t find a copy of the desktop Quickbooks anywhere for sale in the UK. In the end we found that we we’re allowed to give them a link to download and install our desktop version for free, so that they could produce our accounts.

    So far, our internal accountant says he like it. It integrates well with Google’s G Suite, another powerful online suite of software products, which we migrated to at the same time.

    The migration from QB Desktop to QB Online was very smooth, and it’s a darn sight cheaper, saves us around £500 a year. However it does not migrate over any of your employee data beyond their name and address, I found it a complete PITA to renter all our employee’s details, Tax, NI and Pension, YTD figures data etc. QB’s excuse to me was that this is because QB Online Payroll is a third party add on, and not developed in house. Needless to say their excuse didn’t cut much ice with me.

    However, a much larger security/privacy problem has emerged with our QB Online user accounts. It transpires that our QB Online users are actually given a self-managed ‘Intuit’ user account, that we have absolutely no control over. All we can do, is give (or revoke) a users access to our QB Online accounts data. All revoking does is stop them accessing our data, their intuit account/password continues to exist.

    The security of our QB Online user accounts – who are accessing our financial data – is completely under the users control, not ours! We can’t set, or reset, our users passwords. We can’t enforce strong and/or unique passwords for our users. We can’t force our users to always use 2 factor authentication (2FA) to access our QB data. In any case, 2FA is only to phone numbers, and amazingly QB allow it to be overridden, as an option is given to those logging in, to send the 2FA code to their email address instead.

    The security of your QB Online financial data is a very very bad joke. I am gobsmacked, and utterly shocked by it. Users accessing your financial data are not under your control at all. Users are Intuit account holders, and QB Online data owners have ZERO granular control over their users accounts. It’s like some terrible bad joke.

    This issue deserves more visibility, it needs highlighting. As it is, user account management controls for QB Online data owners does not exist, and your QB Online data is not in the least bit safe. Users can turn off 2FA, bypass it, use weak passwords, or non-unique passwords, login from anywhere, on any insecure machine they like. Hackers can override 2FA, and they can also gain access by pretending they have lost their account password, and answering simple questions about the user that are not secret.

  • Great insights, thanks!

    Clearly Intuit is interested in transitioning its entire customer base to both a subscription model, as well as to the Online products. Those are really two different objectives. From a strategic perspective, the questions are how to best manage that transition.

    Simply from a business standpoint, a couple of things you said stood out.

    *Main focus for desktop development is Enterprise.
    *Enterprise is already on a subscription model.
    *Enterprise is seeing price increases.
    *Improvements to lower tier desktop products will mainly focus on bug fixes and reliability issues.
    *There is no plan to switch lower tier products to subscription.
    *Although it wasn’t stated, margins for subscription, and online are generally significantly higher than installed software w/out a subscription plan.

    Taken a whole and reading between the lines, this leads me to believe that Pro and Premier will get “maintained”, but not upgraded, and sunsetted sooner rather than later. The Online product, being far from parity with Enterprise, is however getting closer and closer to Pro and Premier.

    My guess (obviously just conjecture) is that the plan will be to push anyone who, for whatever reason, still needs deployed software to the Enterprise product. But the real development resources and push is going to be to the Online products and eco-system.

  • Charlie, I read your article and tried your suggestions but I still cannot get my loans manager to work in my QuickBooks.
    Can you provide me with the changes to the registry file that are required?

  • Thank you for the very informative article. Are you aware of any plans to develop a truly cloud-based (not just cloud-hosted) version of Quickbooks Enterprise? It seems strange that on the one hand Intuit seems to deliberately throttle QBO by not providing it with all the same reporting and inventory capabilities as Enterprise, but at the same time is encouraging customers in general to move away from desktop programs and to cloud-based applications. The small business I work for would be happy to continue paying the same license fees for Enterprise if it were cloud-based rather than desktop, but as mentioned in another comment, cloud-based solutions offer many greater opportunities for integration with third-party applications and are obviously the wave of the future. Thanks for any insights and information you may have!

    • David, first let me say that since I’ve retired, I don’t talk to Intuit management on a regular basis as I did when I wrote this article originally. So, things may have changed as far as Intuit’s intentions.

      However, they have been very consistent with their message on this for many years now, as I’ve discussed in multiple articles.

      1) Their focus is first on developing QuickBooks Online, over QuickBooks desktop (including Enterprise). There is new life for Enterprise, but the future is QuickBooks Online.

      2) Their focus is on the smaller business, starting with “self employed” and working up to businesses that are larger than that, but not enterprise sized businesses with QuickBooks Online.

      3) For reporting and advanced inventory functions in QuickBooks Online, they rely on third party developers to create products that will integrate with QuickBooks Online. You said it yourself, “cloud-based solutions offer many greater opportunities for integration with third-party applications”. So to get to the kind of functions you see in Enterprise, with QBO, you need to consider add-on products.

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