On the small-business side, Intuit's strategy began with broadening its definition of small business. The company originally sold a single version of QuickBooks that worked for businesses with 20 or fewer employees. Last year, Intuit raised it sights with QuickBooks Enterprise, a beefier version capable of handling up to 250 employees. Intuit estimates the change increases the potential QuickBooks market by $18bn a year. Now Intuit is hoping to get QuickBooks customers to upgrade by offering versions targeted at specific business segments. The company earlier this year released QuickBooks Point of Sale, a version of the accounting software tailored for retail businesses. It expects to offer up to a dozen more specialty versions of the software within the next few years. J.P. Morgan analyst Adam Holt said there's still a lot of potential in selling products tailored for specific business segments, as the main competition for QuickBooks is smaller companies that make software and have only niche products. By coming up with its own approach and selectively acquiring companies such as American Fundware, a specialist in accounting software for nonprofits that Intuit agreed to acquire earlier this month, Intuit can offer customers the best of both worlds. "It's a highly fragmented marketplace," Holt said. "You've got a lot of little solutions-providers targeted at individual vertical markets, but there isn't anybody with Intuit's brand name, balance sheet and installed base that's rolling out vertical products. I think they're really well-positioned to succeed there." Intuit is also working to use the strength of QuickBooks to sell other services, such as payroll processing. Intuit has posted substantial growth in the past year for its QuickBooks payroll services and recently announced the acquisition of payroll specialist CBS Employer Services. Holt said payroll services are on track to become a substantial part of Intuit's business. "Historically, the company has done a pretty good job of cross-selling services like payroll and financial supplies," he said. "We expect payroll services to generate on the order of $150m in revenue (this year). I think they've just begun to crack the surface there." Analysts had expected QuickBooks to find fresh competition from Microsoft and its recently acquired Great Plains accounting software subsidiary, but to date, Great Plains has had little success in pitching to small business, Punishill said, partly because of the complexity of Great Plains software. "The real strength of QuickBooks for a long time has been usability," he said. "Whether Microsoft can dumb down the Great Plains product really remains to be seen. Besides, this is Intuit's business; this is what they do. If the Great Plains acquisition doesn't work for Microsoft, it barely shows up on their balance sheet."
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