The Quicken monopoly

The warning was shockingly clear: Upgrade now or "you will no longer be able to access ... [d]ownloads of your bank, credit card, credit union, or investment account transactions."

I had just received this message within Quicken 2006. It came in a pop-up alert box from Intuit, and it gave me a deadline. The download feature would be shut off for all users of Quicken 2006 as of April 30th. But I could avoid this fate by upgrading to Quicken 2009. "Buy now."

The ability to download bank statements directly into Quicken to balance accounts is a core function of the product. For me, Quicken is pretty much worthless without it. They had me by the you-know-what. For me, the warning amounted to an ultimatum: Upgrade -- or else.

The problem was, I'm trying to save money right now, and I didn't see much value in the upgrade. I use Quicken like most people use a microwave. It may be Deluxe "personal finance software," but to me that's just a fancy name for an electronic checkbook program. I push a couple of buttons a few times each month, download my banking and investment statements, balance the accounts and I'm done with it. I don't use the other bells and whistles the program offers, which is why I've passed on upgrading. Like the other Quicken 2006 holdouts, I haven't seen much benefit in doing so.

Trouble in Quicken land

Apparently it's not just me who feels this way: Getting people to buy new or upgrade their personal finance software has been such a struggle that Intuit's primary competitor, Microsoft, threw in the towel last year. It didn't even bother launching a 2009 version of Microsoft Money Plus. According to the Money team, "..the feedback we are hearing loud and clear is that, after 17 years in the market, the incremental updates to the software don't merit a new product release every year." That statement was posted on a Microsoft News Group last year. Microsoft, it appears, has ceeded the market to Intuit -- at least for the packaged personal finance software.

That revelation from Microsoft lead blogger Shelley Elmblad, who follows personal financial software market, to conclude that this might be the beginning of the end of personal finance software.

I certainly hope not. So I asked Stephen Baker, analyst with NPD group, what's going on. According to NPD's numbers, sales of packaged personal finance software got hammered last year. Unit shipments are down 31% while revenues are down 21%. Not surprisingly, sales declines were steepest toward the end of the year. One reason for that is the bad economy. Another, Baker says, was Microsoft's pullout from the market. Microsoft has taken a drubbing from Quicken. It's market share has declined to almost zero and Quicken has taken 95% share (in unit shipments), up from 80% in 2008. Intuit now has a defacto monopoly in the personal finance software market.

But it is still under pressure. It faces a mature market in which "penetration is high, feature/benefit growth is low and the economy is terrible," Baker says. In its latest annual report, Intuit states that 2008 revenue for Quicken was flat compared with fiscal 2007. That's an ongoing trend: Quicken revenue in 2007 was also flat compared to 2006.

The other option: Quicken Online

Here's the challenge from Intuit's perspective: Everyone who wants Quicken pretty much has it. There's no one left to take market share away from. So Intuit needs users to upgrade to keep the revenue flowing. It must cajol laggards like me into coughing up the funds to buy new and more upscale versions of the program. Or, better yet, convert me to move to an annual subscription model as a user of its software as a service offering, Quicken Online.

I don't see that happening. Next time I'll give you three good reasons why I'm not hot on the idea.

Quicken: The Saga

• Part I: The Quicken ultimatum
• Part II: The Quicken monopoly
• Part III: The Quicken cloud
• Part IV: The Quicken decision
• Quicken's double cross (Feb 2008)