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Intuit has announced that it will acquire Homestead Technologies, a company that provides a suite a Web creation and e-commerce tools, for US$170 million in cash. This acquisition continues Intuit’s march into what we term a “connected services,” or combined software and Web services, business.

We have been believers in this concept for some time now. In fact, we ran considerable analysis around the acquisition of StepUp Commerce for US$65 million and the Google-Intuit deals last year (for example, please see: Intuit Deals With Google, StepUp to Have Major Impact on SMEs). Kelsey was the only firm pre-briefed by these companies ahead of the acquisition and partnership.

A lot has been written on this topic and we disagree with the naysayers. Intuit has proved it can drive self-registration of SMBs with product lines as diverse as payroll. The advertising products will get there as the assets are consolidated and programs fall into place. We expect that this will take time since integrating changes into software products takes longer than changing Web sites.

We still believe Intuit’s software and services model is where we’ll see a strong competitive advantage with regard to the SMB market emerge. Again, Intuit is the company to watch for this software and services model.

If it were not for U.S. and European regulators, we would add Microsoft here as well. As it stands, it’s hard to know with certainty how much cross services bundling will cause the various agencies to slow the process with regard to the software giant.

No doubt, Allison Mnookin will tell us more at the following ILM:07 session, Friday, Nov. 30:

9:30 am – 10:00 am
Keynote Address
Allison Mnookin
, Vice President, Small Business Division, Intuit
For Intuit, the publishers of Quicken and Quikbooks, nothing is more important than engaging the small-business owner, and leveraging that relationship –something Intuit is effectively doing with Google and others. This keynote by Intuit’s Small Business leader Allison Mnookin addresses the challenges of winning strategies for small-business services and advertising, and Intuit’s success strategies.
Moderator: Neal Polachek, CEO


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