In a blow to Netscape Communications (NSCP), Intuit (INTU) said today it will build Microsoft's (MSFT) Internet Explorer browser into future versions of Intuit's market-leading personal finance software.
Since October 1995, Netscape's browser has been bundled with Intuit's flagship Quicken personal finance software.
In return for switching to Microsoft, Intuit's personal finance Web site, Quicken Financial Network (QuickenFN), will become a "premier Active Channel" preconfigured on version 4.0 of Microsoft's Internet Explorer, due later this month in beta form. That browser will be bundled in the next version of the Windows 95 operating system, code-named Memphis, giving Intuit's service a potential audience of millions.
Intuit characterized "push" distribution of QuickenFN content as part of its drive to become an Internet publisher. In a similar content-oriented move, the company said June 11 it would pay $40 million for a 19 percent stake in search engine Excite (XCIT).
Intuit's somewhat reluctant switch, which Microsoft is actively publicizing, carries interesting strategic implications. Two years ago, Microsoft tried to buy Intuit for $2 billion but dropped the deal after federal trustbusters intervened. Likewise, Intuit and Netscape share a common board member, big-time venture capitalist John Doerr of Kleiner Perkins Caufield & Byers.
In addition, Microsoft's Money software is Quicken's chief competitor, and getting "premier" status in Microsoft's browser gives Intuit parity with Microsoft Investor service, which competes with Intuit's QuickenFN content.
"It was a technology-driven decision," said Bill Harris, Intuit's executive vice president. Specifically, he said, Intuit can turn its legacy C++ software code into ActiveX controls, which can then work with an embedded Microsoft browser. Netscape's browser does not support ActiveX except through browser plug-ins, which Harris termed "as less than satisfactory for large volume in consumer software."
"We remain friendly with and supportive of Netscape, and our product will continue to be compatible with theirs," he added. Intuit will create a NetCaster channel, according to Harris, though that deal is unannounced.
Intuit also said Microsoft's technology was easier to embed into its client software applications than Netscape's, Both 16-bit and 32-bit versions of Quicken, QuickBooks, and TurboTax will have IE embedded starting this fall.
With Microsoft's components, Quicken users will be able to go to the Web for information but remain within the Quicken interface. With Netscape, users launch the Navigator browser to get Internet data, leaving the Quicken environment--a critical consideration for brand-focused company such as Intuit.
"No money changed hands, but we don't discuss our deals," said Kevin Unangst, a Microsoft product manager.
Throughout 1996, Microsoft did similar bundling deals with Internet and online service providers, such as America Online and AT&T. In return, the providers got preferred placement for easier sign-up through Windows 95.
Although Microsoft has won bundling deals, browser market share--the goal of the deals--has been more elusive. The company has made progress in catching up to Netscape, but, by its own estimates, Internet Explorer hovers between 30 and 40 percent of the browser market.
Today, Netscape executives acknowledged that its Communicator Internet software browser could not provide Intuit with an embeddable Web browser "component."
"What Intuit wanted to do, they could not do well with our product," said Mike Homer, Netscape senior vice president of marketing. However, Homer added that the company hopes to lure Intuit back next year when it turns Communicator into a set of JavaBeans components.