Born out of desktop computer revolution of the 1980s, software maker Intuit (Nasdaq:INTU) recently crossed the quarter-century mark. In an industry where so many companies fly high only to crash and burn a few years or even quarters later, Intuit's longevity is definitely one for the record books.

The key to the company's success has been its ability to identify solid markets with high repeat business potential and then dominate them to the point of achieving a near monopoly position. And to date, that strategy has paid off handsomely.

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Undisputed Market Leader
Intuit is now the undisputed leader in the individual tax preparation and small business software markets in the United States. Its market leading TurboTax software holds a 79% market share; well ahead of the 21% share held by TaxCut which is sold by tax preparer H&R Block (NYSE:HRB).

In the personal finance software market, Intuit's grip is even tighter with its Quicken product holding an amazing 95% market share. With such an overwhelming lead, it's no surprise that Microsoft (Nasdaq:MSFT) had to bow out of this market earlier this year after failing to get any sort of traction with its Microsoft Money product. Just last month, Microsoft also threw in the towel on its Office Accounting software package in the face of overwhelming market dominance by (yep, you guessed it) Intuit's QuickBooks.

With such a lock on its key markets, you'd think it's all beer and skittles for Intuit. But, there is some downside to being the top dog. When demand in those markets begins to dry up, a market leading position ensures that you bear the brunt of any down dip. And that apparently is the situation now shaping up for Intuit. With individuals and small businesses still taking a disproportionate measure of pain from the recession, Intuit's sales are now starting to show some real weakness.

Sales and Earnings Guidance Lowered
Following the release of slightly better than expected first-quarter results, the company scaled back earnings and sales guidance sharply for its second quarter, the period during which the company generates most of its tax software sales. Intuit now expects earnings per share next quarter to come in between 29 and 32 cents; well off from the Street's expectations of 37 cents.

Sales guidance was also lower, now in the $800 to $835 million range versus the average analyst forecast of $833 million. This could all be signs that Intuit's core software markets are now maturing, and the company needs to come up with a different strategy to ensure future growth.

Acquisition Signals New Growth Strategy
That new strategy could now be taking shape with the recent acquisition of personal budgeting and financial planning website The free web service allows clients to consolidate multiple bank, brokerage and credit card accounts to track and better manage their personal financial affairs. So far 1.7 million users have signed up and Intuit reckons it can quickly scale up to five to 10 million users. Those aren't bad numbers considering that decades of effort were required to get 25 million users onto Quicken.

The business generates revenues from finder's fees from financial institutions that get new clients from the service and it also acts as a platform from which to move users onto the more traditional software products Intuit sells. It's a bit like a social networking site for financial services.

The potential of the concept has not gone unnoticed by some big players keen to get something similar off the ground. In September, unconfirmed press reports surfaced suggesting Citigroup (NYSE:C) and Microsoft had teamed up to develop a comparable personal finance portal.

The Bottom Line
Intuit's recent move away from its legacy '80s desktop business is a positive development that opens up a whole new business model for the company beyond just selling software. If it takes off, expect analysts' current lukewarm "Hold" recommendations for the stock to quickly heat up to a convincing "Buy." (For more, see The Industry Handbook: The Banking Industry.)

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