Microsoft Bids For Intuit and Quicken

November 1994

Intuit’s Quicken has long been the most successful software for personal financial management, far outselling products from Mecca and Computer Associates (and, for that matter, Microsoft’s own Money software). Its seductive 70% market share apparently convinced Microsoft to pay a hefty $1.5 billion for the privilege of immediately owning this software category, rather than trying to continue to build its own Money product (a 10% market share) into a bigger part of the market.

Quicken was going to be a tough product to beat and Bill Gates, having already made some deals that could take Microsoft into the electronic banking business, was concerned that banks would make their deals with the software vendor who could offer the best opportunity to intersect the customers.

Give Bill Gates and Microsoft credit. They did what few high tech companies can do, put their NIH (Not Invented Here) banner in the closet, found a home (at Novell, see article following) for their own Money product, and bought what they thought was the winning strategy. Gates doesn't hesitate to reinvent Microsoft's game plan -- or Microsoft itself -- if he thinks that's what it takes. What he cares about is winning.

The question is, will the feds let the deal fly? It’s one thing to have Microsoft running the entire business software market, but can we have them running all of the personal consumer market, too, including the access it provides to on-line electronic services like banking? Some banks have already opted to use software that ties their customers closely to them. Others feel that they need the extra customers that compatibility with popular software packages like an extended version of Quicken could provide.

Some firms were quick to demand that Microsoft promise -- or the government legislate -- that Microsoft would not itself go into the banking or credit card business.

The most interesting part of this deal is the insight it gives into the workings of Microsoft and Bill Gates. Here is a company that is not afraid to get rid of a product it’s invested time, money and ego in building in order to buy a more successful product it needs for its strategy. Here is Microsoft correctly seeing the intersection and potentially explosive growth of two markets: PC-based consumer financial management and on-line electronic services. Microsoft means to be important in both and they are a company in a hurry.

Few companies have been able to survive round after round in a dynamic market by correctly identifying new markets and moving toward them on a speedy and timely basis. Microsoft may be, at least for now, the exception that proves the rule.

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Entire contents © 1994 by Amy D. Wohl. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden.