Trouble in Vista paradise? Large software vendor warns of major compatibility problems and burdensome remedies

Intuit, developer of one of the world's most popular accounting applications used in small, medium and large businesses (Quickbooks), has notified its customers by email that Windows Vista is incompatible with some of the features of Quickbooks 2006. According to the email (see a complete image of it here) from Intuit senior vice president of QuickBooks Brad Smith:

You may have heard about the upcoming release of Microsoft's new operating system, Windows Vista. Microsoft has made significant changes to how software runs on Windows Vista.
I'm sending you this important service alert because you are using a 2006 or earlier version of QuickBooks software.

Since QuickBooks 2006 and earlier versions were developed and released before the introduction of Windows Vista, these versions may be adversely affected when used on  computer running Windows Vista.

This will impact Simple Start, Basic, Pro, Premier, Payroll and Point of Sale, as well as other QuickBooks products and services. We recognize that your QuickBooks software is an important business tool and apologize for any inconvenience this may cause you. 

Smith's e-mail goes on to describe what action is required on behalf of Quickbooks customers. For example, if they're not going to be running Vista, they don't need to do anything. But, if customers are upgrading to Vista, then they need to spend more time figuring out whether or not they'll run into compatibility problems based on what features of QuickBooks they use. To do this, users are advised to visit Inuit's Web site where the software company provides very detailed information on the affected features and what the remedy is.

Unfortunately, for many of the features, end-users are advised that they must switch on Windows XP compatibility and run Windows Vista with system administrator privileges. However, one of the cornerstones of Vista's security and a long-time recommendation of Microsoft is to run Windows (even XP) as what's know as a lesser privileged user or LPU. When running Windows with system administrator privileges, the risk that malware could enter the system and damage precious system files thereby destabilizing or ruining a PC altogether goes way up. Malware would of course have to find its way into the system in the first place. But security experts including those at Microsoft have always urged extreme caution when it comes to running Windows as a system administrator. Doing so gives software that's installed on a PC (including any malware)  access to sensitive areas that it wouldn't otherwise have access to (thereby increasing the chances of a catastrophic event). So, in essence, one remedy is to deactivate one of Windows' most important security features.

Beyond that, there is still another list of QuickBook features that are incompatible with Vista to the point that even switching into the XP Compatibility and Administrator modes won't help. Here, the only remedy is to upgrade to QuickBooks 2007.

According to Intuit spokesperson Rachel Euretig, QuickBooks 2007 was launched in the Fall as a version of the software that was designed to be Vista compatible. Euretig told me that prior to that, there wasn't much Intuit could do on the Vista compatibility front since the operating system was still in development. In an effort to be as communicative as possible, Euretig says the company is still searching for potential problems and taking a proactive stance when it comes to notifying customers of its findings.

Still, ZDNet reader Al Chartier who was the first to tip me off to the problem says he's not satisfied. According to Chartier, Intuit's suggested remedy means that he must pay $200 for QuickBooks Pro 2007 (editor's note: Right now, Intuit is offering the software at a $20 discount) Euretig says that QuickBook customers who purchased Quickbooks 2006 on or after July 26th are entitled to a free upgrade to the 2007 version. Euretig also said there is no special upgrade price for existing QuickBook customers. All customers (new or existing) must pay the same price. According to Chartier, " I won't be buying any more Intuit software." 

In the bigger picture, the problem with QuickBooks raises new and very serious issues for Microsoft on the eve of Vista's launch. If the software title was a small and very vertically oriented program that falls into the category of collateral damage that Microsoft must accept every time it releases a major new version of an operating system, the damage would be minimal. But Intuit is a software bellwether and QuickBooks one of the most popular software titles in the industry (Update: Euretig says that at the time of QuickBooks 2007's launch, there were 3.7 million active users of QuickBooks).

Not only should the compatibility questions and remedies cause small and medium business users to reconsider any plans to upgrade, enterprises may need to put the brakes on as well. Intuit offers an enterprise version of its tools (starting at $3,000) which means that any large business that's a QuickBooks customer that's thinking of moving to Vista may have to think again. Not only must they examine how many users within the business might be impacted, they also must (a) look at the cost of upgrading should that be the only other remedy and (b) wait to see if other software vendors begin to issue similar warnings. Based on what Intuit's Euretig told me, the company is still looking for problems other than the ones listed on its Web site; a situation that can only mean that other software vendors are doing the same. In other words, the full x-industry backwards compatibility report on Windows Vista is still in flux. 

Earlier today, my colleague George Ou posted a blog on how backwards compatibility problems between ActiveX and the new version of Internet Explorer 7 are causing most of South Korea to hold off on upgrading to Vista because of how incompatibilities could interfere with that country's banking system.  

Another fire this snafu is sure to fuel is rhetoric from the part of the Web 2.0 camp that offers alternatives to locally hosted programs like QuickBooks. For example, this problem with upgrades is exactly the sort of problem that NetSuite CEO Zach Nelson uses to justify his browser-based hosted solution over his competitor QuickBooks. With browser-based hosted solutions such as NetSuite, compatibility with the browsers is all that's important (and something that hosted solution providers like NetSuite have plenty of time to resolve). 

I've reached out to Microsoft for its take on the issue with the position that Intuit is indeed  a bellwether software developer and how incompatibilities with its software could cause the entire industry to take a deep breath. Not only does this affect potential upgrades to Vista on existing systems, the problem also has ramifications for hardware vendors who are hoping to capitalize on Vista's launch by offering a slew of new systems that are pre-loaded with Microsoft's new flagship OS. I've yet to hear back. But when I do, I'll post an update here on TestBed. (Update: Microsoft has issued a statement).