Microsoft Changes Tax Plans

SAN FRANCISCO (03/24/2000) - Dropping TaxSaver, Microsoft Corp. pairs with H&R Block to gang up on leader Intuit TurboTax.

It's the marriage of an Internet heavyweight with the undisputed champ of tax preparation tools in the bricks-and-mortar world: Microsoft is dropping TaxSaver after this season, pairing with H&R Block's TaxCut to jointly take on the leader, Intuit TurboTax.

Microsoft will see through the remaining three weeks of the tax season, says Ed Bland, group product manager for Microsoft Personal Finance Software. It will still sell federal versions of TaxSaver and support some 300,000 TaxSaver customers through the federal tax extension deadline of October 16.

But next year, TaxSaver customers are invited to upgrade to H&R Block's TaxCut program. Microsoft already has a relationship with H&R Block; it markets the electronic version of TaxCut on MSN Money Central.

But soon the link will be stronger.

Microsoft and H&R Block's tax software subsidiary Block Financial will develop native data links between TaxCut and Microsoft Money personal financial management software. And the firms will develop ways for you to integrate your online financial activities, including online tax preparation, with the 70,000 tax experts in H&R Block's 9000 storefront offices, says Gene Goldenberg, senior vice president with Block Financial.

Those services could include having an H&R Block expert check your online tax return for a few extra dollars, or "any number of variations on that theme," Goldenberg says.

Ongoing Challenge

This marks the second time the undisputed 800-pound gorilla in the software business has been thwarted by the much smaller Intuit. Even though Microsoft has made its bones by crunching entrenched market leaders, for ten years it has been unsuccessful at denting Intuit's personal financial management empire.

In 1991, it introduced Microsoft Money as a direct competitor to Intuit's longtime market-leading Quicken. Microsoft tried to buy Intuit in 1994, but the U.S. Justice Department put the kibosh on the deal.

Quicken and Money are the keystones upon which Intuit and Microsoft have built a wide array of other financial service offerings. Both are basic tool and data programs, with the ciphers to translate all the disparate data types and formats used on financial Web sites. Tax preparation is just one very lucrative aspect of both programs' broad financial product lines.

By any sales measure, Money has never been able to score even a respectable second place in market share to Quicken. From a feature or technology standpoint, Money and Microsoft's MSN Money Central are every bit as good as their Intuit counterparts. Money now has about 3 million users--fewer than a quarter of Intuit's combined total of Quicken and QuickBooks users. But Microsoft's MSN Money Central has 10 million regular visitors, Bland notes.

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