Google (GOOG) just upped the ante in its desktop challenge to Microsoft (MSFT) The Web-search leader hammered out a deal to include various Google tools in a new version of Intuit's QuickBooks small-business accounting software. The partnership represents one of Google's most aggressive moves into PC desktop software, the market dominated by Microsoft.
By teaming with Intuit (INTU), Google could get access to the 1.5 million small businesses Intuit expects will buy or upgrade to QuickBooks 2007 when it ships this fall. The new software package will include Google's AdWords for creating Internet text ads tied to search keywords.
The software will include other tools both companies hope small businesses will find invaluable. It will let businesses list contact information in Google Maps and introduce products into Google search results through Google Base. "QuickBooks has millions of small businesses, and this is the fastest way to get millions of new advertisers into these online networks," Google CEO Eric Schmidt says.
DESKTOP WARS. With Microsoft on the verge of releasing a flurry of software upgrades, time is of the essence for Google. Early next year Microsoft plans to release new versions of its Office productivity suite and Windows operating system—Office 2007 and Windows Vista, respectively—that will come with built-in access to Microsoft's search engine.
"Clearly, Google is running quickly ahead of Vista and trying to get itself established on the desktop before Vista gets launched," says Christa Sober Quarles, an analyst at Thomas Weisel Partners Group (TWPG). Earlier this year, Google struck deals with software marker Adobe Systems (ADBE) and PC maker Dell (DELL) to distribute its search toolbar and desktop search software to users' PCs (see BusinessWeek.com, 5/11/06, "Google's Desktop Offensive").
As Google stakes its claim to the desktop, Microsoft is increasingly blending its desktop software and online services. "This notion of being able to have desktop products integrate with online services is something we support today and will continue to evolve," says Satya Nadella, corporate vice-president for business solutions at Microsoft. In response to the Google-Intuit partnership, Nadella rattled off features that will come with Small Business Accounting 2007, Microsoft's competitor to QuickBooks: one-click product listings on eBay (EBAY), Paypal invoicing and payment services, credit monitoring through Equifax.com, and online payroll services from ADP (ADP), to name a few.
SEEKING AN EDGE. In Microsoft, Google and Intuit have a common foe. Intuit has held its own against Microsoft in a multiyear battle for the small-business accounting software market. Partnering with Google will give Intuit an edge against its rival as Microsoft adds more online features to its desktop products. In interviews, neither Schmidt nor Intuit CEO Steve Bennett would elaborate on how the companies will divvy up proceeds. "Obviously, Intuit is going to get the sales of the QuickBooks 2007 software, and Google will get the share of AdWords," Bennett says. "Each company gets money based on the value it contributes to [its respective] part of the transaction. The details of that we'll keep proprietary."
Beyond desktop software, Google is also integrating its services into online business software. In August, Salesforce.com (CRM) and NetSuite said they will incorporate AdWords into online customer-management applications. But Schmidt was quick to distinguish those arrangements from the Intuit deal because the QuickBooks desktop software will give millions of small businesses who have not yet ventured onto the Internet the ability to do so—and in the process, he hopes, bring Google millions of new customers.