Beyond Binary

The defeat of Microsoft Money at the hands of Intuit's Quicken marks a rare chapter in the annals of software history.

Intuit is one of the few companies to take Microsoft head-on on its home turf--packaged software--and come out on top. Even more notably, Intuit has managed to do it several times, with Quicken of course, but also with QuickBooks and TurboTax.

Of course, it was more than just Intuit's success that led to Money's demise, which CNET News first reported on Wednesday. The product was ultimately doomed by several factors, including a shift away from packaged software, the rise of Internet-based rivals like Mint.com, and a brutal economy that has forced Microsoft to scale back ambitions in several areas.

In its heyday, though, the battle between Intuit's Quicken and Microsoft's Money was a fierce one. While Quicken dominated in retail sales, Microsoft landed some key deals with banks and was able to get many computer makers to pre-load Money on new PCs.

Robbie Cape, who ran the Money business from 1999-2001, said that while the company could keep pace on the software end, it could never duplicate Intuit's marketing prowess or its dominance of the retail market.

Robbie Cape, who ran Microsoft's Money business in its heyday from 1999-2001, now runs Cozi, a Seattle-based startup.

(Credit: Cozi)

"It really has very little to do with technology," said Cape, who is now CEO of Cozi, a Seattle-based start-up. "What Intuit and Scott Cook were so formidable at was consumer marketing. He treated marketing Intuit very much the same way as one would treat marketing a bar of soap or bottle of shampoo. He made Quicken a household name. He spent outrageous dollars to get there."

Intuit spokesman Scott Gulbransen said his company simply had the better product. "Customers voted with their wallet," he said.

NPD analyst Stephen Baker said that Intuit won out because it was aggressive and built critical mass in the finance software arena, adding a number of adjacent products and dominating the retail channel.

Whatever the case, it was an epic battle that stretched on for years. Microsoft tried to buy Intuit in the mid-1990s but saw that effort halted by regulatory disapproval.

In the wake of the failed takeover bid, Microsoft doubled down in its efforts to take on Quicken. The company added a ton of partners, revamped the product's design, and tried to integrate a host of new financial planning tools.

Cape said the pinnacle of its effort came in 2000 when Wall Street Journal reviewer Walt Mossberg gave Microsoft Money the edge over Quicken in his review.

However, even with some positive reviews, Money never managed to overtake Quicken and Microsoft's product has been on the wane for some time. The clear sign that the end might be near came last year, when Microsoft announced it would stop annually updating the product and would shift to an online-only sales model as opposed to also offering the product at retail stores.

"The writing was kind of on the wall," Gulbransen said.

Baker says Microsoft's inability to make a viable business out of the online-only sales model shows that a Web-based sales approach isn't enough to keep all consumer software alive.

"While the retail packaged software market is tough it is not easier to be online only," Baker said. "Your audience is much more limited and (the) potential customer base is much smaller when you go to the cloud. That business model is not a panacea when you are in a struggling market."

Still up in the air is another Microsoft product that aimed to take on Intuit but fell short--Microsoft's small business accounting product. It was launched amid some fanfare in September 2005, but struggled to make inroads in a field dominated by Intuit's Quickbooks. Microsoft discontinued boxed sales of the product and last year made it available for free download as Office Accounting Express 2009 for free download.

A modest payoff from Money
As for Money, while it was never the dominant player, it did break some technical ground for Microsoft. It was one of the first programs at Microsoft to merge Internet content directly into a desktop application and it was also among the first PC-based programs to include advertising directly from a CD.

In many ways, Money was the precursor to Microsoft's "software plus services" strategy, in which the company posits that desktop software won't be replaced by online options, but will rather lead to hybrid products.

Scott Cook founded Intuit in 1983. He's now chairs the executive committee.

(Credit: Intuit)

Indeed, when Microsoft was plotting the future of its consumer software lines earlier this decade, it often pointed to Money as the archetype of how advertising and online content could merge with locally run code to form the hybrid application of the future. In a series of ThinkWeek papers seen by CNET News, Microsoft researchers argued that the company might need to even take things further and make many of its desktop products free, tapping advertising to support their development.

Of course, the question that lingers is what went wrong with Money. Was it that the strategy itself was wrong? Was Microsoft just too far behind, or did the company just not go far enough. Microsoft never opted to make Money entirely free, though it did offer a $20 Money Essentials product and included it in one of the Microsoft Works bundles often included on new PCs.

For his part, Cape moved on from Microsoft in 2001 and now runs Cozi, whose online tool aims to help families juggle a busy calendar. Cape said he learned a lot from working on Microsoft Money. Chief among those lessons was that user experience matters.

"Managing your family logistics and your family calendar is about as fun as managing your personal finances," Cape said. "It's not exciting. What we've done at Cozi, which is very much like what we tried very hard to do on Money, is to take that mundane, ho-hum experience and not only make it fun but also make it beautiful."

As for Microsoft and Intuit, the longtime rivals are now working together--building a tool that will allow Money users to move their information over to Quicken.

"We're working with Intuit to help develop a file conversion process that will help Money customers more easily convert their existing data files to Quicken," Microsoft director Adam Sohn said. "Both Intuit and Microsoft hope this will be ready to go for the new release of Quicken this fall."

Intuit says it is happy to have the business.

"We look it as an opportunity to show Microsoft Money customers what they have been missing...over the years," Gulbransen said.

Microsoft plans to stop selling Microsoft Money, its venerable, but not market-leading personal finance program, CNET News has learned.

The software maker has been notifying financial institutions and plans to announce the move to customers over the next 24 hours via a posting on its Web site and a notification in the software. Although Microsoft will stop selling the product at the end of June, it plans to support it through January 2011.

Microsoft plans to stop selling Microsoft Money at the end of the month, although for the moment it continues to pitch the product on its Web site.

(Credit: CNET)

After that point, people can continue to use the product, but they will no longer be able to get automated data feeds from their banks, credit card companies and other financial service providers.

Last year, Microsoft stopped selling Money at retail stores, offering it only by Internet download. The company also said it would stop doing annual updates, but said at the time it planned to continue offering the product.

Microsoft's Adam Sohn said the company now plans to halt sales of the product at the end of the month. A variety of factors led the company to change course.

"It's a mix of what's going on in the market, what makes sense for long-term for us and a little bit on consumer behavior," said Sohn, a director in Microsoft's Online Business Services unit.

The discontinuation of Money is one of the more high-profile product cuts made in the wake of the company's cost-cutting efforts, which began in January. Microsoft said in March it was largely discontinuing its Encarta encyclopedia and has also scrapped its Windows OneCare antivirus product.

As of Wednesday, Microsoft had made no mention of its plans on the Web site. Rather it was offering to sell Money for $59 and featured a link for financial institutions to get more involved in the product.

Sohn said that the company plans to continue selling Money through the end of the month and hasn't made a plan to offer refunds to recent buyers of the product. Those who have recently bought the product, he said, still have a good while to get the value from it. (Microsoft will support Money slightly longer for those who have recently bought the product, per its licensing terms).

Plus, he said, some people will continue to use it even after the automatic services stop. At that point, consumers will have to manually download information from their banks and other service providers. "After Jan 31, 2011, the product will work," he said. "It just wont have the rich-services back end."

Although Microsoft will support current partners pushing data to Money users, it won't be adding any new institutions. It will, however, let current partners re-brand themselves.

The software maker also plans to continue its MSN Money Web site, although Sohn said the company opted not to try to recreate the full Money program on the Web.

Competing with Intuit and Mint
Microsoft has long been chasing Intuit's Quicken. Microsoft even tried to buy Intuit in the mid-1990s, but the Justice Department blocked the move.

In subsequent years, Microsoft has continued the product but also has continued to trail Quicken's sales. More recently, Money has also faced a new wave of Internet-based competitors, such as Mint.com and Intuit's free Web-based Quicken Online program.

The company has been trying for years to grapple with massive changes in the consumer packaged software market as much of that business moves online.

Although its core Office and Windows products remain strong sellers at retail, the company has opted to scale back in other areas, particularly in the purely consumer arena.

In addition to canning Encarta, Microsoft also stopped selling its Digital Image Suite product after the release of Windows Vista.

Update, 2:40 p.m.: Microsoft has now posted a notice on its Web site.

"With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed," Microsoft said. "We would like to thank the many dedicated users who have been enthusiastic supporters of Microsoft Money over the years, as well as our partner financial institutions who helped pioneer a digital vision of financial management."

Meanwhile, I also spoke with a spokesman for Intuit, who said that the company is looking at ways to make it easier for Microsoft Money users to bring their data over to that product.

"We look it as an opportunity to show Microsoft Money customers what they have been missing... over the years," Intuit spokesman Scott Gulbransen said.

Although Intuit has recently been bulking up its free online product, Gulbransen said that the company is committed to also offering PC-based software. "We are committed to those who would like to stay with a desktop software solution," he said.