Intuit announced today its purchase of Mint.com for $170 million. The formerly bitter rivals will together form a sizable community of registered users who manage their finances online. The move brings together synergistic, complementary assets:
Mint.com allows consumers to manage their personal finances by aggregating content from bank accounts, brokerage accounts, mortgage accounts, and other online sources. It offers users a comprehensive dashboard view of their finances — allowing them to track changes day by day and to compare this month's spending against their typical budgets. Mint.com builds its business model around referrals: It funnels offers to consumers to save them money. For instance, if a user is paying a high interest rate on her credit card, Mint.com will recommend other credit cards with lower interest rates. These lower rate cards pay for the privilege, at least in part, of placement. Mint.com complements consumers' multiple online accounts (like their account with their bank or brokerage), but provides an aggregated, easy to understand overall view of consumers' financial lives.
Intuit Online offers financial management services as well — an outgrowth of its client program, Quicken. Intuit Online makes a lot of its money through B2B2C services, white labeling its financial services to over 2,000 small-to-medium financial institutions. Credit unions and banks pay to outsource the financial management services function to Intuit, offering their consumers sophisticated online tools — but under their own brands. This strategy makes sense because many more consumers use their banks’ Web sites than employ a client program (like Quicken client), creating a large addressable B2B market.
The larger story here? “Consumer cloud computing,” more accurately described as Web-based application delivery. Intuit saw upstart Mint.com gain 1.5 million customers to its free online service in only two years of existence – eclipsing, at least slightly, the installed Intuit Online user base. Mint.com’s cache with young people, its recommendation and budgeting technologies, and its iPhone App all complement Intuit’s own approach.
From a consumer product strategy perspective, packaged software providers are moving to create Web-based experiences to complement, or to supplant, their client programs. Anyone remember brick-and-mortar Egghead Software, or the size of software aisles in the bygone days of now-defunct CompUSA? Those days are long gone, and packaged software is a challenging business unless you are Microsoft Office.
These Web-based services must offer some feature that's uniquely suited to the cloud — like collaboration with peers or content sharing, or, in this case, aggregation across a wide variety of personal accounts plus the ability to access one's information from multiple platforms and locations.
Alongside Turbotax (a very successful Web-based application, Turbotax.com, in addition to the long-successful client program), these assets will help Intuit move away from its heritage as a giant of consumer packaged software. Instead, Intuit becomes an even stronger Web-based service provider — one that can monetize those Web applications via an increasingly diversified set of business models.