Tech Industry

Microsoft beefs up bookkeeping push

The software giant revamps its bookkeeping software for small businesses with expanded features and a lower price in an effort to better compete with entrenched rivals.

Microsoft is revamping its bookkeeping software for small businesses with expanded features and a lower price in an effort to better compete with entrenched rivals.

Microsoft on Thursday said it has shipped Small Business Manager 7.0, which adds sales, payroll, purchasing and inventory tracking capabilities to the set of accounting applications it released about a year ago.

The Redmond, Wash.-based software maker also has knocked off about $500 from the product's price per user. When Microsoft released Small Business Manager last year, it set a price of $1,500 per user. Small Business Manager 7.0 costs $995 per user. The payroll application costs an additional $500. Microsoft lowered the price earlier this year.

Small Business Manager was developed out of Microsoft Business Solutions, a unit the company formed from the acquisitions of Great Plains and Navision, which make applications for midsized businesses. Small Business Manager's target audience is at the lower end of the market--North American companies with fewer than 25 employees and less than $5 million in revenue.

In that market, Microsoft faces competition from two major rivals--Intuit, maker of the popular QuickBooks applications, at the low end of the market, and Best Software's Peachtree accounting package at the higher end.

With lower prices and added features, Microsoft may be looking for a firmer foothold in the market. QuickBooks costs $100 to $380, and Peachtree starts at $99.

But competitors say the software behemoth hasn't been much of a threat.

"Intuit and Peachtree control 95 percent of all new units sold," said Ron Verni, chief executive officer of Best. "That's all the oxygen in the room."

Analysts and Microsoft resellers also say Microsoft has yet to make significant inroads in the market.

Karen Engle, Microsoft product manager for Small Business Manager, said Microsoft's focus this year has been on training and certifying a couple thousand sales partners, since the company doesn't sell the software in retail stores. With improvements in the latest release, she believes the company is now in a better position to compete.

And, as the software has done before, it is attempting to crack a new market through a combination of lower prices and a strong network of partners. Microsoft has taken the same approach in the database software, operating system and Web browser markets in years past.