Tax Product Sharpens Finance Competition

Microsoft has released the U.S. versions of TaxSaver, a PC tax preparation product. TaxSaver fills a gap in the Money product line, allowing Microsoft to compete more effectively in the home finance software market in the near term and gain traction in the market for online financial services in the long term.

Where TaxSaver Fits

TaxSaver augments Money 2000, Microsoft’s personal finances program that includes checkbook balancing, bill payment, online banking, budgeting, investment management, and financial planning. It comes in Standard, Deluxe, and Business & Personal Editions. Money’s main rival is Intuit’s Quicken, which leads it with an 80% share of the home finance software market.

That market isn’t large, however; it was under US$200 million in the United States this year. Microsoft sees Money less as a cash cow than as a gateway to future growth in online financial services. Money already links users to the MSN MoneyCentral portal for investment planning and other services, and it serves as a front end to Microsoft’s TransPoint online bill payment service. Microsoft’s rival Intuit has moved even more aggressively into services, using its brand name and market share to launch a portal (quicken.com) and services for payroll processing, bill payment, tax preparation, and mortgage shopping. These services provided 9% of Intuit’s FY99 revenue, and its service revenues have more than doubled over the past year.