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Throwing in the Towel - Linux on the server = yes. Linux on the desktop = not if I don't have to

Linux Linux Everywhere. Except where you can see it.

There is a lot of discussion in the media about Linux and Microsoft. The recent agreements between Microsoft and various Linux distros came as quite a surprise for some people, as there is a significant difference in the business model and philosophy of open source software versus commercial software. "Microsoft has announced a partnership with Novell and will help promote Linux. This is stunning. This is like Red Sox fans announcing they're going to root for the Yankees." ( But for others, these agreements simply underscore the reality of the market at large: Windows wins on the desktop. It's not because of functionality or because it's superior technology or because of the cost. It's because of momentum. This is the same reason why Intuit QuickBooks wins when it comes to smb accounting. MOMENTUM. It's the most important thing right now, and it is being leveraged quite nicely.

Take Microsoft, for example. First, they market against Linux. Then, they see the server market numbers being impacted in a big way with Linux sales for servers, so they figure out a way to make that market theirs (at least partially). What this does, in effect, is acknowledge that maybe Linux is a good thing to use on some servers, as long the desktop still runs Windows. Put your "partners" where you want them; where you can possibly control them. That way, you can still fulfill your primary mission - keep your products squarely in front of the end-user. And there are way more desktops than servers in most enterprises. Volume = Momentum. Also, the end-user works directly with their desktop and gets to experience operating the OS and applications running on it. Not so much with servers. Familiarity = Momentum.

Intuit has also taken this approach, and it's going to work for them. The Intuit team apparently heard the message coming loud and clear from the Linux community: "I really need QuickBooks on Linux", and has taken the steps necessary to satisfy the requirements of the market. Sort of.

"Answering the call for an open source option from Information Technology professionals, Intuit Inc. announced that businesses will soon be able to operate QuickBooks Enterprise Solutions from Linux servers." (Intuit press release). Amazing. But, again, it underscores the defacto standard that exists in the market: Windows runs on the desktop. Intuit is willing to acknowledge (as Microsoft did) that maybe servers are OK for running Linux. Maybe servers with Linux are even a good idea. But the application that the user sees? It's a Windows desktop application. The desktop OS that the user must run? It's Windows. Go figure.

Note that it is only the Enterprise Solutions which will be available with a Linux database server. While the QuickBooks Pro/Premier versions utilize the same Sybase database engine, Intuit must have figured that their requirement to support Linux sits only at the Enterprise level rather than the entry-level or smb markets. Maybe they, like Microsoft, believe that only larger companies need or want Linux, and only at that the server level. Again, it is momentum. Intuit essentially owns the small business accounting market, and they will continue to fight to keep it. By softening to the Linux community, at least at some level, they gain users and access to new markets without compromising their primary goal: keep the product squarely in front of the end-user.

It's not really surprising to see either Microsoft or Intuit take this approach. I fully expect other Windows-platform applications to follow this route, and to possibly make their servers available for Linux platform while keeping the client-side in Windows. It allows them to capture a growing segment of the IT market while not increasing their development (or IP?) exposure dramatically. It is typically much more cost efficient to develop to a single platform than to try to support multiple platforms well. With the Microsoft/Linux "alliance", there is an element of safety now for Microsoft-platform developers who wish to incorporate Linux support in their products. And while this all looks good for Linux platform adoption at the server level, the desktop space is still pretty much locked up with Windows (no pun intended).

The Battle for the Small Business Accounting Market

With Microsoft Office Accounting coming on to the market with free downloads and inclusion in certain versions of Microsoft Office Suite, it might appear as though Intuit's QuickBooks will have a hard time keeping the market share that they've enjoyed for so long. But there are a couple of factors which are likely to ensure Intuit's longevity at the top of the small business accounting food chain, and these factors actually have nothing to do with the quality of the accounting software.

While the accounting and bookkeeping aspects of the system are essential, it must be recognized that accounting theory doesn't change from application to application. Whether developed by Intuit, Microsoft, Sage or anybody else, the fact of basic accounting principles is embedded into all commercial accounting systems. The accounting may just not be as apparent - as "in your face" -with some systems as it is with others. With QuickBooks, for example, Intuit embraces the philosophy of simplicity. Perform the task, and let the accounting take care of itself. Even with the higher-end accounting systems, however, the actual accounting is being hidden more and more as applications aim towards a workflow or service orientation to the user interface. If you look at the interface for Microsoft Office Accounting, for example, you will see a fairly simple workflow type of navigation that has become somewhat of a standard for small business accounting applications.

Setting aside the application interface and the simplicity (or not) of use, one of the big elements that keeps QuickBooks at the top of the small business finance market is the ease of managing the data files. Even with the frustrations introduced with the new database structure in the 2006 versions, Intuit never moved away from the encapsulation of the data into a single file. The structure of the file may be more robust, but the simple fact of it being one file is the key. The data file is portable - it can easily be transported from one PC to another; from one system to another. This is important when users need to work temporarily on a laptop or portable computer, then move the file to their desktop when back in the office. It's important when the small business wants to send their books to their accountant. And it's important because a single file is very simple to identify, backup, and restore. In the ASP or application hosting environment, it makes sharing the data file between an accountant and their client easy, as it's all done with file system folders and permissions. With most other systems, the data is not contained in one single file somewhere on the hard drive. The data is usually stored in either a series of files on the hard drive or, more frequently these days, within a database managed by a separate database management system (such as Microsoft SQL). It seems silly that the nature of the data file would have such a profound impact on the adoption of certain applications, but in this case, it has.

Another reason for Intuit's solid placement in the smb finance area is their ability to speak directly to the small business owner in their marketing. By virtue of having gained a large community of individual users with the Quicken product, Intuit was able to latch on to the emerging small business with a similarly simple and personal message. While the software is indeed business software, and is being marketed in more commercial venues due to the Enterprise edition now available, QuickBooks remains the only commercial accounting product which is broadly and directly accessible without the participation of a consultant, reseller, or accountant. Looking at the Sage accounting products, you find resellers, consultants and accountants heavily involved in the front-end of the sale. The same is true with the vast majority of accounting and finance applications in the market, Microsoft included. Only QuickBooks has managed to develop the momentum from the ground up, creating and environment where accountants and consultants must support the product because that is what the consumer has. Further, because the business started out with the QuickBooks product, upgrading to a "bigger" edition frequently makes more sense than converting to an entirely new software system, and certainly presents less of a barrier to the business owner. From the Simple Start to the Enterprise Edition, the range of QuickBooks applications is being extended to reach further into the next higher level of the market, making it that much more difficult for the competition to get the opportunity.

Microsoft has a significant challenge in front of them in this respect. While they have proven success in delivering products to the consumer-level of the market, the bulk of these offerings are more oriented towards entertainment than business or finance. When it comes to business tools for the small business market, it is the Office Suite (Word, Excel, Powerpoint and Outlook) that represents the foothold for Microsoft. By introducing the small business accounting product as part of this suite, Microsoft may be able to get the application in front of users, but the jury is still out on whether or not the application will actually get used. The effort could be supported by a community of bookkeepers, accountants and consultants who are able to get the small business users working with the accounting application and who can support them long term. But the perception by many is that the Microsoft channel partners, those who resell and support the business solutions, work with larger businesses and more complex solutions. And, of course, charge accordingly. Without a visible, experienced supporting channel for the small business solutions - a channel experienced in dealing with very small businesses and with non-technicians - it will be difficult to build a lot of momentum around Office Accounting. There may be over a million downloads of the Express version of the software, but it will be interesting to see how many of those turn into actual users.

Small Business Books

The small-business market, unlike the mid- and enterprise markets, utilize the general services of public accountants in much greater volume and typically for more fundamental business services such as business bookkeeping. Larger organizations typically employ accounting and bookkeeping departments and/or personnel, and rely on outside accounting professionals for higher-level work. Small businesses, however, outsource much more of the core bookkeeping and checkbook management functions to their public accountant. This creates a volume of fairly mechanical work (data entry, document management and filing, etc. ) which can be burdensome and not terribly profitable for many practices. But this level of work is of significant value to the small business owner, and thus the value of outsourcing to the accounting professional is clear.