Re: Intuit's CEO calls for 'OS neutrality

[Steve Cohen <stevecoh@mcs.com>]

Brett Glass wrote:

> At 11:31 PM 12/30/98 -0500, Mitch Stone wrote:
>
> >--- From a message sent by Eric M. Bennett on 12/30/98 5:50 PM ---
> >
> >>Well, this strikes me as a bit odd coming from a company that seems to
> >>enjoy dropping products for the only non-Microsoft operating system it
> >>'supports' (Mac OS).  Maybe they should consider helping the situation by
> >>increasing their support for alternative operating systems.
> >
> >Exactly. How do you spell O-P-P-O-R-T-U-N-I-S-M?
>
> Actually, according to his testimony, he apparently thinks
> it's more a matter of S-U-R-V-I-V-A-L. Note that Intuit DID
> support other platforms (DOS and Mac, at least), but
> eventually felt (correctly or not) that it couldn't keep
> doing this. Here's the CEO's rationale in his own words
> (Thank Heaven for Caere OmniPage, which read it perfectly
> out of Acrobat.)
>
> --Brett
>
> ------- Exerpt from testimony of William Harris -------
>
> 23. The operating system is the essential foundation upon which all other
> software functionality is built. It controls the basic operations of a
> computer, and it defines and regulates what can be done and how it can be
> done. Intuit, and other software application developers, are dependent upon
> the operating system for the basic facilities necessary for the operation
> of our products and services. Without the operating system, none of our
> applications can run.
>
> A. Microsoft Windows is the Dominant Personal Computer Operating System
>
> 24. Windows, the proprietary operating system developed by Microsoft, now
> operates an overwhelming majority of the personal computers operating
> worldwide. I thus believe, and it is my experience, that consumer software
> vendors such as Intuit have no practical choice but to focus software
> product development primarily -- if not exclusively -- on software for use
> with Windows.
>
> 25. This is so because the economics of software development make high
> volume sales critical to profitability. The fixed costs of developing
> software -- including, among other things, research, development,
> programming and testing -- are very large and can only be offset by high
> volume sales. By contrast, the variable costs of manufacturing software
> once it has been developed are quite low. Thus, it is essential for
> profitability of most PC-based software products that the product be
> compatible with Windows. At Intuit, compatibility with Windows is so
> critical that the company will focus on such compatibility even if this
> requires slowing or abandoning development of software for use with other
> operating systems.
>
> 26. For example, Intuit has discontinued DOS-compatible versions of its
> major software products (Quicken, QuickBooks and TurboTax), has abandoned
> development of Macintosh compatible versions of QuickBooks, and has
> dramatically reduced development of Macintosh-compatible versions of
> Quicken and TurboTax. In our most recent fiscal year, more than 95% of
> Intuit's revenues came from users of the Windows operating system. Intuit
> is therefore highly dependent upon Windows from a business, as well as a
> technical, point of view.
>
> 27. The development of software that is compatible with the Windows
> operating system itself reinforces the dominance of Windows, because
> consumers seek to purchase the operating system that is compatible with the
> greatest number of software applications. In turn, software producers want
> their products to be compatible with the operating system that is most
> widely used by consumers. This creates a self-reinforcing cycle (sometimes
> referred to as a "network effect"), which tends to perpetuate and enhance
> the dominance of the leading operating system.
>
> 28. Intuit's dependence on the Windows operating system creates additional
> dependence on the supplier of the operating system, Microsoft. We depend on
> Microsoft for the information, specifications, training, development
> assistance and development tools necessary to develop our products in an
> effective and timely manner.
>
> ------- End of Excerpt -------

Couldn't these same arguments have been made by Borland to justify its
jettisoning of all non-windows related product?  Probably they were.  I'm not
saying Harris is wrong (my employer has made a similar decision with its
shrink-wrapped product) but I am a little curious why you were arguing that
Borland should have gone ahead anyway but not Intuit.  Both cases seem to be
an illustration of valuing short-term survival over long-term.  Or do you
think that Borland was in a more of a position to "make" the market than Inuit
is?