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LOW-END SAAS MARKET WIDE OPEN?

Brad SmithThis might sound a bit heretical. But I remember when Intuit came to market with QuickBooks, arguing that other low-cost packages at the time were essentially disposable.  Users often purchased them, but never opened or didn’t use them and because of the low investment didn’t feel they’d lost much. I’ve often thought the same thing could happen to Intuit and while I’m not predicting an overthrow of the market leader, I think a new generation of players is going to make big inroads online.
Don't forget that more than 20 percent of all customers who purchase QB never use it, according to the company's own figures. But there are also signs of weakness with the desktop players and their early cloud efforts. Sage threw out three of its SageSpark apps and Intuit has killed Billing Manager. But the real signs of weakness come in Intuit’s QuickBooks numbers. Yes, Pro QB users pay $200 a year and QB Online users pay $24.95 per month. And yes, Intuit ended the year with 283,000 online subscribers, up from 201,000 in 2010 and 147,000 in 2009, a nice 92.5 percent increase over two years. But that’s also an increase of 136,000 subscribers. During the same period, the number of desktop QB units sold has fallen to 1,515,000 from 1,837,000 a decrease of 322,000 units. CEO Brad Smith has said repeatedly in earnings broadcasts that QB Online attracts new customers, not QB desktop users. That’s a lot of people who have left. Maybe with the recession they are out of business? That thought occurred until recently with the release of numbers that indicated a high level of small business formation this year. In the company's earnings call, Smith acknowledged that an apples-to-apples comparison can't be made because of other services purchased by each customer set. He also told participants "You've got more feature functionality on the desktop that you don't get online." That has been the criticism of QB Online that is not just from the competition: It's not as good as the desktop product and it is giving competitors an opportunity.
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