Economic Moat
Andrew Lange, Eq. Analyst, 27 September 2018
Intuits wide moat is underpinned by high switching costs
and positive network effects. Learning to use the majority
of its applications takes time and effort. Therefore, SMBs
and end users would not only incur additional software
and training costs, but would also face operational
disruption and the risk of errors in transferring financial
information if they switch to an alternative product or competing application. To strengthen the stickiness of its
products, Intuit has skillfully intertwined the functionality
among its multiple products, making users of one of the
firm's applications more likely to adopt an additional
product as their needs expand. For instance, QuickBooks
users are likely to adopt Intuit's payments and payroll
services, and Quicken users are more easily lured into
transferring their yearlong financial information into
TurboTax. Furthermore, the pervasiveness of Intuit's
applications generates positive network effects because
the commanding market share of its products provides a
strong and self-reinforcing incentive for accountants and
end users to use Intuit's applications.
Morningstar report
