Microsoft yanks Money off retail shelves

The software maker shifts its personal finance product to online-only sales with less frequent updates. Could it be a canary in the coal mine?

Updated 2:30 p.m., with comment from Microsoft.

It had become a ritual for Microsoft's consumer unit. Every year it came out with a new version of Microsoft Money and sent new boxes to retail stores.

That tradition is now dead.

Microsoft, via a newsgroup posting from one of its enthusiasts, announced it will no longer update Money each year and, more importantly, it will stop selling the product at retail stores.

It's the latest indication that Microsoft is seeing a shift in the way people, particularly consumers and small businesses, buy their software.

Microsoft

"More and more retail consumers are going online to shop the endless rows of digital shelves," Microsoft said, according to the newsgroup posting, which was noted earlier Friday by ZDNet blogger Mary Jo Foley. "In response to our retail partners' needs, consumer behavior and business efficiencies, Microsoft is focusing distribution efforts for Microsoft Money Plus software online via download and discontinuing traditional box sales of the software at retail."

Money is not the first consumer title to see its fortunes change in recent years. Another perennial shelf space occupant, Microsoft Digital Image Suite, was discontinued altogether last year.

However, Microsoft added in the posting that it is not abandoning packaged software companywide.

"Microsoft does not see shrink wrapped software going away anytime soon and we are always talking to customers about different ways to price and package our software offerings," it said in the posting. "The company is evolving its strategy and product solutions to meet customer demand and optimize business efficiencies."

Indeed, the company has seen very strong sales of the latest version of Office and its OneCare security software is also sold heavily at retail stores. The company just introduced Equipt , which is a subscription service combining the two, but sold as a packaged product at retail.

The company has been eyeing this shift for some time and looking at options like subscriptions, online services, and even advertising-funded software on the PC. After years of weighing the issue, the company went ahead with Microsoft Works SE , an ad-supported free version of its consumer productivity package.

Intuit, another big name in consumer software, has already seen a huge shift to both online sales as well as selling its personal and small business finance programs as online services, rather than packaged software.

The company already gets more money from its TurboTax online service than it does for the packaged product, with more than 10 million people doing their taxes online. The company also has 128,000 small business customers using its online services, according to spokeswoman Heather McLellan.

It has also debuted niche products that are online-only such as a medical account expense manager product.

Update: I spoke this afternoon with Chris Jolley, a product manager in Microsoft's financial products group. He added some details on the trends that prompted Microsoft's move.

In the past 12 months, half of the sales for Money Plus, the latest version of Microsoft Money, have come via digital download. That's roughly three times the rate of a year earlier, he said.

Although the company laid the ground work for less-than-annual updates when it renamed the product a year ago, Jolley said that the decisions to go digital and to skip this year's update were made more recently.

 

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