From: ddean@sapphire.risc.uni-linz.ac.at (Drew Dean)
Subject: Re:  Solid Value, Rulers, and Copy Protection
Keywords: Pretty much on the money, a few more insights
Reply-To: ddean@risc.uni-linz.ac.at
Organization: Wirtschaftsuniversitaet Wien
Date: Mon, 17 Aug 1992 11:53:56 GMT

In article <1992Aug15.135953.374@count0.uucp> cgb@count0.cmhnet.org   
(Charles G. Bennett) writes:
> In article <1992Aug12.015856.13142@fsg.com> chuck@fsg.com (Chuck Yerkes)  
> writes:
> > 
> > Having followed this thread for a while, I must comment on some  
things.
> > I'm going to extrapolate a bit to all computer systems instead of just  
next.
> [some stuff deleted]
> >    Quicken, at $60, is RARELY pirated.  You can run a small business  
on
> > it and it compares favorably with packages costing $500 or more.  Its
> > sold gazillions of copies.
> 
> But don't forget market share, you can truly sell "gazillions" of  
Quicken
> because there are gazillions^10 possible customers.   If EVERY NeXT  
owner  
> bought (or could buy) Quicken  your total sales would be about 2 million  
gross.
> (40,000 * $50) most likey you would be lucky to get 10% so $200,000.    
Now they  
> would be HAPPY to NET 30% (after taxes and rent and programmers and 50%  
> discount to resalers) so they would be lucky to make $60,000.
> 
> I realize that I'm playing fast and loose with the numbers, but I think  
you get  
> my point.   It's no wonder that Quicken sold on the NEXT would sell for  
at  
> least $300.00.

> Chuck Bennett, BenaTong Consulting
> Palace Security (UNIX Consulting :-) )
> cgb@count0.cmhnet.org

Having worked for Intuit (I'm now in graduate school, no reflection on  
Intuit), I can add a few things.  There are some things that I'd like to  
say but can't, so you'll just have to bear with me....

The size of product development teams and time to market people have  
posted before are reasonably accurate, and certainly good enough for this  
discussion.  However, the other factors haven't been quite so correct.

With respect to size of market, Quicken for Windows sold 140,000 copies in  
the first 3 weeks it was available (that number is public, so I can quote  
it).  Uh, I really like these black machines, but I don't think Next has  
sold that many machines in its life.  Quicken for MS-DOS (horrible OS, but  
I think it's a great product :-)) has sold millions of copies in its life.   
With Intuit's pricing structure, they must sell lots and lots of software,  
so I don't expect to see Quicken on _any_ Unix workstation too soon.   
There just isn't the installed base, and the installed base is mostly in  
the wrong place: how many small businesses and/or individuals have Unix  
workstations in their homes ?  It's not close to a million....

It's not just product development that costs money -- Intuit is well known  
for its customer service....Experiment: buy Quicken, and call tech  
support.  Do this multiple times.  Compute the average length of time on  
hold.  Intuit tracks how many calls get to a human in the first minute,  
and this is given every week in the Monday morning staff meeting.  While I  
can't give hard numbers, I think it's safe to say that a Microsoft or  
Borland-like performance (I only use those as examples that I've been on  
hold with before, I'm sure others are equally as bad...) would get the  
tech support manager fired in a hurry.  (See last year's Inc. magazine (I  
think) article for many more details)  This type of support costs money,  
but Intuit's been _very_ successful with it -- they've been hiring lots of  
people in the last year (I'm told one of the tech support job fairs ended  
up on TV because the line was all the way around the building....).

To do a NeXT product upto Intuit's standards would take much more than  
$200,000 (expected gross revenue).  For a company of Intuit's size, at  
$300/copy (total revenue a little over $1 million), selling 40,000 copies  
of Quicken for NeXT wouldn't be worth it (that's like 2% or less of  
revenues).  That might be quite a nice niche for a small company, though.

To make it in the NeXT market, I think you need to be a small company,  
with great service, and a good product.  Hopefully, you'll be able to grow  
with the market.  But NeXT really needs to sell many more machines before  
mass market applications software for under $100 can take off....

Drew Dean
ddean@risc.uni-linz.ac.at
Not speaking for RISC Linz or Intuit.
Newsgroups: comp.sys.next.software