Few seem to realize that Xero is badly beating QuickBooks (QB) and QuickBooks Online (QBO).
We often hear that QBO is growing very quickly, at up to 80% a year. However, it is not growing fast enough to cover severe Intuit QB desktop losses. There once were 4.8 million QB desktop users. Intuit recently told me there were now only four million users. This 800,000 drop is about three times the total number of QBO users. Therefore, it seems that QuickBooks Online creates few new users, as opposed to cannibalizing QuickBooks desktop users.
This is very important, because Intuit surveys showed that those with QuickBooks add-ons were far more loyal and far more likely to upgrade much faster. It also is very important because no company can satisfy all users. Despite this, QB changed its add-ons interface FOUR TIMES, in little more than 11 years, without giving any add-on full access to all data. One recent interface required a 20% revenue share, with a $1,000 per month minimum charge. I am not even sure if this includes a marketplace.intuit.com listing, which once cost about $5,000 a year (with test and review costs).
This is one reason a top QuickBooks add-on developer recently wrote, “The Demise of the Quickbooks Third Party Developer?” As he said, “Intuit founder Scott Cook [said]… he had to “fight” with his team to open up the QuickBooks system to others. People wanted access to their data, and their frustration would finally be removed… because the people worked hard to put in their data, and it belongs to them – NOT you…. [vs] we decide what data is important for you, not you…” I commented on this at (July 13, 2013 at 10:59 pm).
Xero is growing 50% faster than QBO (120% a year). It has a free add-ons lists and a free industry standard RESTful add-ons interface. As a result, QB, add-ons are down 20% (marketplace.intuit.com, even if we count many old dead add-ons) to 50% (Google links), vs a more than 100% annual increase in Xero add-ons (now around 250). This precisely parallels what happened years ago, when QB beat Peachtree (now Sage), after Peachtree drove away their add-on developers. Thus was a big reason why QB soon became so dominant and why Xero is now badly beating QuickBooks and QuickBooks Online.
Intuit Financial Services Sold:
Intuit paid $1.3 billion for Digital Insight and related companies seven years ago. This let it sell software to small and medium banks. It also paid $170 million for Mint, which downloads all bank and credit/debit card entries nightly, in 2009 (six years after top Intuit execs agreed with, but never acted on, my suggestion that QB do this). Intuit also began a healthcare program. Together, they made up what should have been a very fast growing Financial Services division. However, Intuit bank software did not successfully compete with the Yodlee software used by Xero and many large and small banks. Yodlee also has FAR more users than Mint. Intuit recently sold Digital Insights, at a $320 million loss. It also announced it was dropping its healthcare division.
This came about at the time that Yodlee announced a Yodlee – Xero partnership, so 40 million Yodlee users may soon see Xero ads. This is one more sign that Xero is badly beating Quickbooks and QuickBooks Online.