TurboTax 2002 and the Macrovision Safecast

Disclaimer: I own no Intuit stock, I own no H&R Block Stock, and I have been a legal paying user of TurboTax, Quicken, and Quicken Family Lawyer up until this year. I am sorry to report that I am not one of the alleged people that according to Intuit "have agendas that are different than just pure consumer agendas."

I am now a user of TaxCut Platinum, Microsoft Money Deluxe, and Kiplinger Home and Business Attorney. I just received my rebates on February 18th (4 checks). It will take a lot to get me back to TurboTax, and I probably will never return to Quicken as I feel that Microsoft Money is a better program (see http://www.cnet.com/software/0-3227836-8-20307973-1.html).

Introduction
Intuit has added copy protection to TurboTax for 2002. Starting in 2002 you have to activate the program on-line or over the phone, and the program is tied to one computer. There are two reasons that they decided to go this route. First, it enables them to mail out TurboTax CDs to existing customers, urging them to purchase the activation on-line or by phone (they mailed out seven million TurboTax CDs). This cuts out the retailer and Intuit gets to keep all the money. Second, it prevents illegal copying of the software since even if someone copies the CD it does them no good because the program is not activated.

During January and February Intuit has been bombarded with bad publicity, most recently from the Wall Street Journal. They finally are making noises about some changes. However the changes they are promising have only to do with improving the copy protection scheme so it does not remain on your PC when you are not running the program. The other problem of being able to use the program on multiple PCs, i.e. home and work, desktop and notebook, etc. has not been addressed. Many people are experiencing problems with activating the software.

This has all been very good news for the competition. H&R Block's TaxCut software was rated higher than TurboTax by the Wall Street Journal, New York Times, Christian Science Monitor, Barron's, PC Magazine, PC World, C/net News, Chicago Sun-Times, Seattle Times, Asbury Park Press, Hartford Courant, Kansas City Star, Indianapolis Star, St. Paul Pioneer Press, InternetNews.com, CNN Daybreak and CNN Headline News. Besides the licensing and activation issue, reviewers praised the ease of use, the free live tax advice, and the support.

A very good Usenet Post
"It [Safecast] is a clear example of short-sighted greed and arrogance overruling common sense. Forcing user-hostile functionality down the throats of your customers is NEVER a good idea. Neither is stealing from your customers or committing vandalism to their property.. Note: We already fought the copy-protection wars back in the early '80s (remember "Lotus 1-2-3"?). It went away then because it was generally considered unacceptable for a vendor to deliberately place usability roadblocks in the path of their legitimate users. This is no different in that respect; only a more vicious and more damaging implementation of the same brain-dead idea. It too needs to go away. Entirely."

Intuit Conference Call--Agendas, Anecdotes, More Lies, a Side Issue Specialist, and Changing the Subject instead of Answering the Question.

People With Agendas--What a Crock!
On the 13 February 2003 Intuit conference call (start at 59:25) Steve Bennett stated: "One of the things I think that's important here for all investors to understand is that despite all the nervousness, you hopefully see what we see; it's not having much if any impact on our business. There's a lot of people out there that have agendas that are different than just pure consumer agendas. So I think that one of the things we're looking at hard is who are some of these people that are saying these things about product activation, and It's not all just straight consumer feedback. So there are <sic> some good consumer feedback and there are some other people that have other agendas on these boards. So I think it's important for investors to see through some of this and understand what's really going on. Only a big issue for a very small people <sic> or for people with their own agenda."

Please ignore all the news stories, the product tests by ExtremeTech, the insightful articles by Walt Mossberg, the product evaluations, the amusing postings of chats with Intuit Tech Support regarding activation problems etc. It's perfectly clear that if you are having problems with activation then you have an agenda. In fact, leave this web site right now.

The friend of a recent employee admits to passing around a Copy of TurboTax
One of the anecdotes the CEO of Intuit related to the analysts was that of the neighbors of a recent employee admitting that a single copy of TurboTax used to be passed around to ten families. The message was that these former pirates would now all become paying users. All over the country there must be illicit neighborhood crime rings of TurboTax thieves that are bashfully being converted to paying users.

The Intuit CEO Lies About Jim Louderback
In yet another anecdote, Steve Bennett stated: " the editor that just wrote one of the most scathing articles up front just bought a copy of TurboTax despite writing all of these negative articles." He was referring to Jim Louderback of ExtremeTech, who in fact has not bought a copy of TurboTax. I suspect that someone like Louderback gets his taxes done by a CPA!

Steve Bennett sounded like former President Ronald Reagan, making up stories to divert attention from the facts. All this points to the real possibility that, despite this good quarter, Intuit is very worried about next quarter and is desperately lying to analysts to divert attention from their TurboTax woes. Steve Bennett will lie about Jim Louderback buying a copy of TurboTax, what else did he lie about in the call?

Intuit Paying for some "Independent Tests"
Intuit will release independent tests showing that TurboTax does not harm the performance of a users PC.

There's a term used in The Peter Principle, "Side Issue Specialist." If you are unable to address the real issue then you simply create a non-issue and focus your energy on solving the non-issue and making a lot of noise about it. Performance has never been the real issue. Spyware has never been the real issue. The real issues are the activation problems, the inability to legitimately use the program on more than one computer, the incredible hassle if you change PCs or hard drives, and the nastiness that Safecast does to your hard drive. Steve Bennett addressed none of the real issues, choosing instead to become a Side Issue Specialist. Pathetic.

Changing the Subject Instead of Answering the Question
One analyst asked about the shift from retail sales to direct sales. This is a touchy issue for Intuit. Most of their sales are through the retail channel but they desperately want consumer to buy direct. As their annual report states: "they often generate significantly higher revenue per unit than retail sales, particularly for our small business and tax products." So what do you do when you don't want to answer a question directly? You change the question! Intuit launched into an explanation of how increased sales and new products would lift sales in all channels.

Cutting Out the Retailer--The Real Reason for Activation
Most articles talk only about the anti-piracy issue since it is the issue that is most visible and has alienated so many users. The piracy issue is a smokescreen. As stated in the PC World article, "Intuit says it has neither empirical research nor widespread anecdotal evidence that allows it to estimate how many people are either selling or giving away their copies."

The real issue is the fact that the activation system gives a huge boost to Intuit's effort to move sales from the retail channel to the direct channel. Intuit desperately wants to increase direct sales because they are so much more profitable. In the most recent earnings report they stated that TurboTax revenue was up 11% even though TurboTax has been losing market share.

This tax year Intuit mailed out millions of un-activated TurboTax CDs to its registered users (including me). To use the program you have to pay for it with your credit card. Intuit gets to keep ALL the money when you purchase the software in this manner; the retailer gets nothing. Activation is what makes this distribution system possible. Mailing CDs is much more effective than urging people to buy the product by downloading it. Many people still use dial-up and cannot easily download such a large program. Pushing CDs is very effective. Some people are happy to pay the extra $10-15 to avoid a trip to the store. Some people don't realize that the CD they received was not free software (I was behind someone in the Costco return line that told me that he was returning TurboTax because Intuit sent him a free copy). Some people don't realize that Intuit is charging more for direct sales; they are used to things costing less when purchased on-line or by mail.

Intuit makes no secret of its desire to increase direct sales, but they avoid being too outspoken about it because it would alienate retailers. Personally I think direct sales of a product like TurboTax are a great idea. The retailer adds no value and Intuit should reap more of the rewards for their products. A couple of the analysts in the conference call asked about direct sales versus the retail channel; the Intuit CEO side-stepped the question (no desire for angry calls from John Fry (Fry's Electronics), Bruce Nelson (Office Depot), Jim Senegal (Costco), and W. Alan McCollough (Circuit City)).

How does Activation Work?
Intuit is using a program called C-Dilla (aka Safecast) from Macrovision for activation. C-Dilla writes a code, based on the registration number and activation information, to your hard disk (in an area that is not copied by hard disk backup and restore software such as Casper, or erased by normal (DOS level) reformatting of the hard drive). You cannot get a second activation code for another computer, say for a notebook or for your system at work.

You gotta love the confusion on Intuit's own web site regarding activation (underlining mine):

What is Product Activation?
Product Activation is designed to help reduce unlicensed use of TurboTax software by securely binding a single copy of TurboTax to a single computer.

Does Product Activation limit the installation of TurboTax to one computer?
No. Product Activation lets you print or electronically file tax returns from any computer that TurboTax is activated on; it does not prevent installing the program on another computer.

So let's get this straight, product activation binds a single copy of TurboTax to a single computer, but product activation does not limit the installation of TurboTax to one computer! Now it's perfectly clear! Seriously, what exactly does this all mean in English? It means that you can install TurboTax on as many computers as you want, but you can only print or e-file from the single computer that you first activate it on. Intuit has made changes to their software (download) that now lets you edit forms on computers that the software is installed on, but not activated on. This is an improvement to what you can do with the CD version which does not give you access to forms (only the interview process).

Internet Security Level = Low to Activate
TT 2002 requires that you set your IE security level to LOW in order to register the product online OR use the one-click update facility. If you are having trouble activating, save your self a $14.95 call to Intuit, and check your security level. In IE, click on Tools > Internet Options > Security. Not sure of the Netscape Navigator settings. Be sure to move your security level back up after installation.

Network Printing Problems
TurboTax now features problems printing to network printers (depends on the network). To get around this, make a PDF file of your tax return and then open the PDF in Adobe Acrobat Reader and print from there (this works as long as the PDF created by TurboTax is made printable).

Activation Problems? No Problem
Have problems with Activation? No Problem, just start a chat session with one of Intuits tech-support people. Here are some examples of chat sessions: 1 , 2, 3, 4

While these chat sessions are amusing reading, please realize that the Intuit tech-support people are not the cause of the problem. As the front line employees they are subjected to the wrath of tens of thousands of irate TurboTax users and former users. Please be polite even when you want to scream at them when they tell you to re-install for the gazillionth time!

The DIVX Analogy
There have been many poor analogies by Intuit supporters trying to garner support for Intuit's type of copy protection. I think I have come up with the analogy that fits almost perfectly.

Remember DIVX? DIVX was a system where you bought a special encoded DVD that needed to be activated before it would play. It required a special DVD player equipped with a modem and the unscrambling hardware. Once activated the DVD could be played for 48 hours. But even within that number of days you were locked to playing it on that one DIVX equipped DVD player; you could not play it on another DIVX equipped DVD player without paying a fee. Even if you paid the fee to convert it to unlimited viewing (called "silvering"), you still could not play it on someone else's DIVX player.

If your DIVX player broke down, and you replaced it with a new one, then you had to call DIVX and get the silvered disk re-activated on the new player (sound familiar?)..

You did not have to constantly re-activate the silvered disks, even if the DIVX player was unplugged from the phone line, the activation for the silvered disk was stored in the player.

If DIVX's activation servers broke down, or if DIVX went out of business (it did), you could no longer use your DIVX disks (except for silvered ones).

Circuit City lost a fortune on DIVX, the whole consortium went out of business and people with DIVX non-silvered disks could no longer play them after the activation server shut down. There are still people boycotting Circuit City as a result of DIVX (not me). I met the CEO of Circuit City at CES just before they pulled the plug on DIVX, and it was clear that the end was near. He was actually a really good guy, he was just misled by some clueless employees into going down the DIVX path (sound familiar?). Circuit City squandered their brand equity and several hundred million dollars on DIVX.

It is often the case that a taxpayer needs to file amended returns years after they first file. It is very possible that the taxpayer will have a new computer by the time the amended return needs to be filed. There are often other reasons that you need to print out tax returns long after you file, i.e. for a loan application, financial aid application, etc.

Note: Intuit has partially capitulated; after October 15th no activation is required.

The asinine statements being put out by Intuit do not do much to reassure anyone. Especially outrageous is the statement by Intuit spokesperson Scott Gulbransen, "There's going to be a certain percentage of people who philosophically disagree with this." He is completely off-base with this statement because philosophically most people agree with the need to prevent piracy; it's the method that Intuit adopted to stop illegal copying that people disagree with. I especially like his claim: "the online griping about product activation hasn't spurred a spike in complaints about TurboTax on Intuit's customer phone lines." Duh! You have to pay to talk to Intuit technical support, why would someone pay money to tell them that they're returning the software for a refund!

Send an e-mail to the Intuit executives explaining why you're no longer going to buy Intuit products (these may not work because Intuit has been disabling outside access to their executive's e-mail accounts).:

I was about to buy the 2002 TurboTax Home and Business program at Costco (as I did for 2000 and 2001) until I read the Reviews at Amazon.com (229 and counting!). If you ever change computers (a rather common occurrence) and want to access your old return with TurboTax to do an amended return, to print it out for a loan application, etc., you may have a problem (this need could occur years after you initially file your return). You can try to get Intuit to give you another activation code, but this is a big hassle, and some users have reported that Intuit won't do this (see the CNET article Intuit pours oil on TurboTax troubles). If you want to have the program on your desktop and your notebook you can't do this unless you buy two copies of the program. Do you want to do your taxes at home then print them out on the laser printer at work? Forget it, you can't install the TurboTax software on both your home and work system (well you CAN install it on a second machine, but you can't print from the second machine).

I also have legal copies of Quicken Lawyer and Quicken. However I will be switching to Microsoft Money and legal software from Nolo Press.

If you see an individual about to purchase TurboTax at a computer store, office supply store, warehouse store, or other retailer, do them a favor by speaking up and telling them that it should be avoided. I've dissuaded several persons from buying it at Costco already. Come on, don't be shy!

I was in Office Depot buying a copy of TaxCut on January 13th. There were signs all over the area with tax software "advising" customers of the activation requirement. I don't think the signs were informative enough, but I was surprised to see them at all. Apparently they were receiving too many returns of TurboTax and decided to be pro-active.

What is Intuit Saying about this Whole Fiasco?
Intuit is putting out conflicting information. According to the CNET article, and according to reports on Usenet, their technical support people simply apologize and tell the caller that they must buy another license, while their spokesman stated: "the vast majority of concerns are based on misunderstandings about Intuit's use of product activation." You can decide who you want to believe; me, I'll steer clear of TurboTax 2002. I have had the need to do amended returns long after the return was initially filed and don't need any more complications in my life. If I call Intuit two years from now with the need for a new activation code for a product that's two years old, what's the chances of me getting it for free? Oh wait, I can't call them, that costs $15, so I need to contact them some other way.

The situation changes by the hour. According to posts at alt.comp.software.financial.quicken, if you contact Intuit via their on-line chat and tell them that you've changed to a new computer, you first get the story about having to purchase another copy of the program; if you press the issue they eventually will relent and give you a new activation code, stating something like, "good news - the rules have just been updated and I've been issued with a new key for your product."

"beginning Thursday, customers will be able to download an update giving them direct access to income tax forms on other computers besides the one where the program was activated. That flexibility hasn't been available."

Prior to this you could access the program on other systems, but only through the interview process; you couldn't go directly to the forms.

Hilarious Exchange between a TurboTax 2002 Owner and Intuit Technical Support Chat

Product Activation Problems with Windows NT, Windows 2000, and Windows XP, as well as Unknown Activation Problems

C-Dilla & Macrovision
Once you install a program that uses C-Dilla, then decide to remove it, the only way to clean your hard disk of all remnants of C-Dilla is to perform a low-level format of the hard drive, something that hard disk manufacturers warn against doing. Then of course you have to restore everything on your hard drive. Whether or not these left over bits are of any concern is open to debate.

As is the case with other copy protection products from Macrovision, the honest user is inconvenienced while the dishonest users find a way around the whole problem.

CD Audio
As if enough people aren't using Kaaza already, the addition of copy protection to audio CDs (which also prevents their playback on PCs) will drive even honest people away from buying music CDs. While CDs with copy protection are forbidden by Philips from using the CD logo (see article) and are hence easy to avoid if you know what to look for, not many consumers are aware of this whole controversy and may simply decide to not risk buying ANY CDs for fear that they can't play them on their PC.

VCR Macrovision
Designed to prevent copying of copyrighted movies, it degrades the picture quality even on legally purchased tapes. It is easily defeated with an external box that adds back the sync pulses.

DVD Macrovision
Designed to prevent copying of copyrighted movies, it degrades the picture quality even on legally purchased DVDs. It is easily defeated with an external box that adds back the sync pulses.

...The big deal is Macrovision, the maker of 'SafeCast', which is the activation method being used the TurboTax, is actively trying to sell it's activation package to other software vendors. While activation itself is easy enough, an automated phone call or almost instant internet activation, re-activation is not. If you had 20 or 30 applications on your PC and they *all* required re-activation after you replaced your PC, by calling their non-free, Monday-Friday, 8-5, wait on hold forever, "sorry our activation key server is down", "sorry we no longer support that version - you will have to upgrade your software for $xx", "sorry the company you have called is no longer in business", "we are here to help you", line; then you might think differently. Personally I would rather get a root canal.

So what does this mean to You?
The best thing to do is to steer clear of TurboTax and use another tax preparation package. H&R Block's TaxCut is one competing product, and it comes with a free copy of Microsoft Money, a direct competitor to Intuit's Quicken. TaxCut was ranked higher than TurboTax by PC Magazine (see review).

How Could they Have done Copy Protection Properly?
Few people dispute the need to prevent illegal copying of software. The challenge has always been to develop a scheme that does not penalize honest people who purchase a program and who don't share it with others. The Intuit scheme for TurboTax fails to meet this challenge.

A better type of copy protection would have been to tie the program to a single return, i.e. by generating an activation code from a combination of the serial number and a social security number that installs the software for that social security number only (but letting you activate it on multiple machines). They could have charged extra for each extra return you want to prepare. This would have prevented the program from being passed around between friends and family. I have, in the past, prepared other people's returns with my copy of TurboTax and would have been willing to pay an extra amount for each return, say $10-15. This method would have not burdened paying customers with an onerous protection scheme and in fact would probably have even generated additional revenue. According to my sources at Intuit, they actually did consider a scheme such as this but were worried that users would balk at providing their social security numbers to register the program. Maybe so, but anyone that e-files through Intuit is providing far more data than just their social security number. And of course Intuit could have been really smart and given users a choice of anti-piracy schemes; single computer activation or locking it to a taxpayer ID. They could also have locked it to an address rather than a social security number.

Another thing that Intuit could have done to slightly lessen the long term problems caused by activation, is to offer unlimited activation after October 15th (the tax deadline if you file for two extensions). Note: Intuit has partially capitulated. After October 15th no activation is required.

Why did Intuit Do This?
My guess is that they calculated that the number of paying customers that they will lose by implementing C-Dilla copy protection will be outweighed by the number of people who were previously stealing TurboTax that will now decide to pay for it. I don't know about this; people that are too cheap to pay for TurboTax will either buy the cheapest product that will perform the same function (H&R Block's TaxCut) or steal it. Typically software companies put out wildly high estimates of their losses due to piracy; they multiply their estimate of illegal copies by the MSRP of the application and declare the result to be their losses. The actual losses to piracy are much less since most people that steal the software would not pay for it under any circumstances, while a percentage of honest users will stop buying the product if it is burdened with an onerous copy-protection scheme.

In this case Inuit estimated a loss of $80 million dollars. The estimate was based on an estimate of 4 million pirated copies, apparently with a revenue to Intuit of $20 per copy. The problem with this kind of math is that it assumes that all 4 million people who theoretically pirated it will now pay for it. Some will pay for it. Some will buy or steal a competing product or use one of the on-line free tax preparation programs. Clearly the increased market share of TaxCut is coming from somewhere. It's almost comical to hear the record industry and software industry proclaim that every person who made an illegal copy would otherwise have bought the product at full price, when in reality only a tiny percentage would have done so.

Some who used to buy TurboTax (and Quicken) will now buy something else. I bought TaxCut and Microsoft Money. All independent reviews rate these two programs above TurboTax and Quicken.

I doubt if many people were selling illegal copies, it was more a case of people letting friends and colleagues make copies of it, which was too easy and needed to be addressed.

It's frustrating because Intuit could have easily chosen an anti-piracy scheme that is not as poorly engineered as SafeCast. In doing so they could have retained all their long time customers while adding former pirates. My belief is that they made a huge miscalculation by choosing this type of copy protection. They should have created a method that prevented multiple returns from the same copy of TurboTax, but that let the return and the program be moved from computer to computer.

"I actually think this whole saga is one day going to turn up as a business school Case Study. It's a classic case of a small number of incredibly foolish management decisions having enormous adverse implications. Yes, management does matter."

Is there any chance of Intuit changing their mind and removing or modifying the copy protection scheme?
Unlikely. Intuit signed a three year licensing agreement with Macrovision for C-Dilla. Click for Macrovision Press Release. Despite all the bad press that Intuit is receiving, it would take a large defection of users from TurboTax to H&R Block's TaxCut for them to admit that this was a mistake and change direction. After all, most purchasers of TurboTax will not notice the very fine print on the box that indicates the requirement for activation, and even those that do notice it are unlikely to comprehend how this might affect them in the future; by the time they have any problems it will be too late to get a refund and they will have to pay for reactivation.

http://www.oocities.org/turbojunk2002/
Especially amusing are the logs of the chat sessions with Intuit technical support, especially the part about installing in Safe Mode?!

http://www.blocktax.com/turbotax_2002_boycott.htm
This person urged a boycott of Intuit, then ended it based on promises made by Intuit to make changes both for this year and in the future. There are still very big problems with the whole activation system that make activating and using the product a problem. I would not advocate a boycott of TurboTax or Intuit; I just urge people to buy other products for their 2002 taxes.

Media Reports
(on-line accessible--there have also been broadcast media stories)

Intuit Shares Drop 24 Percent After Target Cuts
You reap what you sow. But has Intuit learned their lesson, and if so, have they learned it in time?
Reuters, 21 March 2003

TurboTax and DRM: Why It Matters
Instead of being disparaging, every company that flirts with DRM must fully consider the complex ways in which we use our PCs, as well as the potential landmines in customer relations.
PC Magazine, 18 March 2003

TurboTax software fuels indignation from e-filers
TurboTax sales were flat in January, compared with a year earlier, behind the 15 percent to 20 percent growth the company anticipated for the year and the 6 percent growth TaxCut had for the month. Twice as many customers also returned the product that month, compared with the previous January, although still a small fraction of buyers, less than 1 percent."
Baltimore Sun, 9 March 2003

H&R Block Jabs at TurboTax Software
4 March 2003
The ads emphasize that Block's TaxCut programs don't require product activation and can be easily used on multiple computers. Block's TurboTax barbs include an ad that declares, ``Your tax software should instill confidence. Not install controversy.''

Does fair use apply?
Infoworld, 28 February 2003
Software vendors want the kind of lock on products that has never been allowed in book publishing

Intuit sued in TurboTax flap
27 February 2003
A Los Angeles lawyer files a class-action suit claiming Intuit defrauded consumers with its imposition of controversial anti-piracy technology

Update: Intuit Releases Own TurboTax Test Results
24 February 2003
SafeCast consumes RAM on WinXP and Win2K even if TurboTax is not running, on Windows 98 it consumes memory when TurboTax is launched and continues to consume memory even after closing TurboTax. This is all very interesting, but it still does not address the usability issue.

Intuit offers TurboTax tests, apologies
24 February 2003
Paying an' independent' lab to conduct tests is like Saddam hiring independent weapons inspectors. Intuit continues to avoid addressing the real issue, which is NOT performance, it's the usability issue. Repeating the quote from a A very good Usenet Post: " It [Safecast] is a clear example of short-sighted greed and arrogance overruling common sense. Forcing user-hostile functionality down the throats of your customers is NEVER a good idea. Neither is stealing from your customers or committing vandalism to their property.. Note: We already fought the copy-protection wars back in the early '80s (remember "Lotus 1-2-3"?). It went away then because it was generally considered unacceptable for a vendor to deliberately place usability roadblocks in the path of their legitimate users. This is no different in that respect; only a more vicious and more damaging implementation of the same brain-dead idea. It too needs to go away. Entirely."

Taxing for the user
Infoworld, 14 February 2003
TurboTax customers continued to report difficulties when trying to reactivate their software.

Intuit conference call
13 February 2003
About 3/4 of the analysts questions included inquiries about activation. The tone of the Intuit executive's answers indicate that they are gravely concerned about the effect of activation on revenue and returns.

Turbo Tax: Sector 33 Naughtiness
10 February 2003
This is the second part of ExtremeTech's investigation of TurboTax. Bottom line--be very careful. It's especially important to download an unlocked copy of TurboTax after October 15th.

TurboTax revisited: Much more to the tale than met the eye
9 February 2003
"You can't use the software on both laptop and desktop; you can't upgrade your hard drive (even if it fails); you'd best not make a backup and can't do a restore; your hard drive has been appropriated in a way that is surreptitious and pernicious; and maybe the program won't work at all."

Unpopular Security Measures, Retail Data Weigh On Intuit
7 February 2003
Weekly data collected by NPD Group, a Port Washington, N.Y., retail sales tracker, shows sales of H&R Block's TaxCut are rising faster, both in terms of units and dollars, than Intuit's TurboTax. With one misguided move Intuit squandered years of brand building.

Tax Program Develops An Insulting Approach
30 January 2003
If you'd rather be treated with respect than suspicion, shun TurboTax and buy TaxCut says the Wall Street Journal

Don't pass this along
Infoworld, 17 January 2003
Intuit says it knew that some users would be upset with the product activation system

Complaints mount from TurboTax customers
14 January 2003
Software maker Intuit has created an uninstaller program for its TurboTax tax-preparation programs, as customer complaints mount about antipiracy technology included in the software.

This is an amusing article because it repeats the claims by Intuit of misinformation, regarding reinstalling software to access 2002 tax returns in later years. However until all the bad publicity, Intuit never mentioned anything about being able to use the software without activation after October 16th. Suddenly they try to make it sound like this has always been a well-known feature. The article also incorrectly states that C-Dilla does not "bog down" systems. The definition of "bog down" is open to interpretation, but there are indeed cases where C-Dilla causes problems, specifically if you are running Symantec or Norton Anti-Virus with file system real time protection (this was found on the tech support site of another company that produces software that is protected by C-Dilla).

Intuit Soothes DRM Fears With TurboTax Uninstaller
13 January 2003
Uninstalling SafeCast/C-Dilla will also prevent TurboTax from being run. This patch will be available soon according to Intuit Technical Support (by January 17th).

Intuit's TurboTax Activation Scheme Irks Users
10 January 2003
This article corrects Intuit's spokesperson's misstatements regarding being able to use the same activation code again, and blames their support staff for giving out incorrect information.

TurboTax feature draws flak
10 January 2003
Intuit admits mistake in not removing C-Dilla when TurboTax is uninstalled, will release patch

TurboTax Customers Upset By DRM
9 January 2003
"Many loyal TurboTax customers (including this author) have kept each year's TurboTax files for a decade or more, moving them from machine to machine every two to three years. Such customers are likely to defect to H&R Block's TaxCut software, which does not include a "product activation" feature and will guarantee continued access to previous years' tax data."

New TurboTax activation feature triggers backlash
8 January 2003
(this is the widely distributed article from AP, hopefully this article will spur enough lost sales for Intuit to force them to back down)

Microsoft brings copy protection to consumer apps
2 January 2003
This is an especially interesting article as it highlights the difference between the Microsoft scheme used on Plus Digital Media Edition, and the scheme used by Intuit on TurboTax.

"Microsoft claims that no personal information is collected during the process, which essentially associates the software key and hardware configuration in a database of information collected for product activation. In theory, this method makes it easier for consumers to reactivate the software should the PC's hard drive ever be reformatted."

"The 2002 tax year will be the first for which Intuit uses the process to protect against piracy of its TurboTax application. But its activation process is somewhat different than that used by Microsoft. According to Intuit's TurboTax support Web site, the software uses a license key deposited on the computer hard drive."

Neither of these methods lets the user move the application to a new computer, or upgrade the primary hard disk. However at least the Microsoft method conceivably gets around the problem of backups done with programs such as Caspar (see below), since the swapped drive is identical to the original drive.

Intuit Cracks Down on TurboTax Cheats
6 September 2002
"All we're doing is making sure people abide by the licensing agreement," said Intuit spokesman Scott Gulbransen. "This is something that as a software company we never wanted to do until we could do it right."

Information on C-Dilla Safecast and what is necessary to delete it completely from your hard drive

Note that there is no way to run a C-Dilla protected program without the C-Dilla bits remaining on your hard drive. However it is not so easy to remove the C-Dilla bits even if you no longer want to use the offending application. Removing it completely requires you to do a low-level format of your hard disk drive (not a DOS format).

Reversing cdilla's Safecast
In this instance the individual wanted to re-install the application to reset the timer that gives the user a certain number of days before activating the software. First he just deleted the license information in the registry, but this did not work. Second he reformatted the hard drive (high level), but it still did not get rid of the information because it is stored in an area of the hard drive that reformatting does not affect. Finally he did a low level formatting of the hard drive, something a normal user would NEVER do, and this got rid of C-Dilla. As he wrote:

"Well what's the difference between a low-level format and a single one ? The single format will only follow your partition's track/sectors definition, so lot of places are not formatted on your hd. The low-level format will format everything on it, just like your hd was when it was out of the factory, btw it's a good way to wipe out sensible <sic> information on it." (He meant 'sensitive' not 'sensible')

Intuit has a 60 day unconditional money-back guarantee on their products. You can try returning it to the store where you purchased it, but most stores won't take back opened software.

Send the product, with a copy of the receipt (packing slip if it was a direct order from Intuit), to:

Intuit, Inc.
Returns Department
6060 Nancy Ridge Drive Suite 100
San Diego, CA 92121-3290

This guarantee applies even if the software has been opened and used. However this is not a suggestion to buy the software, use it, and return it for a refund. I've been a legal, paying user of TurboTax. I purchased the product and did not let others copy it. Now I am choosing to purchase something else for the 2002 tax year.

The front line employees at Intuit are not the cause of this insanity. I even feel sorry for the Intuit spokesperson, Scott Gulbransen, who is forced to mouth the embarrassingly asinine statements crafted by Intuit management. It's easy to lose your cool when you're on an on-line chat session with Intuit technical support but try to stay calm and refrain from any obscenities. You do not even need to contact Intuit to get a refund, just send in your software to the returns department.

What Did All the Bad Publicity Force Intuit to Do?

1. No activation after October 15th. This eliminates the very real problem of having to do an amended return a few years down the road when it's likely that the user will have a new computer or hard drive. It's unclear if this capability was always there and they just didn't admit it until now, or if it is something new in the latest update. It's also not clear if they actually mean that activation is not required, or that activation is free. If activation is not required after October 15th then this capability was in the program all along and they just didn't publicize it for fear that people that received free CD's in the mail would simply set their system clock forward (and not connect to the network).

2. Change in the policy of requiring purchase of a new license if the user buys a new computer or hard drive. Intuit has instructed their tech support people to supply a new activation code in these cases.

3. With the latest update you can access forms on a PC where you have installed, but not activated, TurboTax. Prior to this you could only use the interview process on PCs where TurboTax was installed but not activated.

4. A patch is being issued to completely remove C-Dilla from the computer when TurboTax is uninstalled.

What's still not so great?

1. C-Dilla has numerous problems with activation. It uses resources on the PC even when TurboTax is not running.

2. There is still no ability to do disk to disk copies and retain the product activation because C-Dilla writes to a hidden area of the hard drive which is not copied by back-up programs.

3. You still can't print your taxes on both your desktop and notebook, or home machine and work machine, though at least you can now work on them on both. What you can do is to print a PDF of your taxes on your home machine and e-mail the PDF to yourself (or write it to a CD-R or ZIP disk) and print it elsewhere.

Intuit has done as much as they can do to mitigate the problems caused by C-Dilla. Even if they wanted to completely remove it there is no good way for them to do that for this tax year. It's nice that they made these changes, but for this tax year it's still advisable to use a different program. Hopefully they will change the copy protection scheme for tax year 2003 TurboTax.

Intuit estimates that about 14 million Americans, three times the number of copies sold, used TurboTax to prepare their 2001 taxes. This does not mean that 9.3 million people used pirated copies since many legitimate buyers of the software use it to prepare returns for multiple people.

Even allowing for the usual exaggeration of software companies estimates of piracy, it still is likely that there are a couple of million people stealing the software. Intuit just has to convince a small percentage of these pirates to buy TurboTax in order to offset the lost sales from people who dump TurboTax due to the onerous activation scheme.

The sad thing is that if Intuit had chosen a less onerous form of copy protection then they could have both retained all their long-time customers while adding even more new customers.

It is important to realize that the copy protection scheme adopted by Intuit was instituted mainly to enable direct sales by mailing out unactivated CDs. The increase in profit from direct sales has been substantial, more than offsetting the lost sales from tech-savvy consumers.

Microsoft lusts after the personal financial software segment and small business financial software segment. They tried to buy Intuit but the deal was shot down by the FTC. Microsoft has failed to gain much market share with Microsoft Money. Apparently Microsoft tried to enter the personal income tax software business, but I missed it so must have been a flop. Intuit has outmaneuvered Microsoft at every turn. Until the latest versions of TurboTax, Quicken, and Quickbooks, Intuit seemed to be able to do nothing wrong. But Microsoft NEVER gives up on market segments that they believe are important. They can fail multiple times, but they try again because they are in it for the long haul and because they have plenty of money to finance their projects.

Microsoft is readying itself for a go at the small business financial software segment, just when many Quickbooks users are steaming. Microsoft Money is by all accounts a better program than Quicken, but Quicken has a huge installed base. Another attempt at personal income tax software can't be far behind.

Fans of a company attribute any criticism to affiliation with competitors or stock ownership in a competitor. Opponents of a company always suggest that somebody defending it must own stock in the company. When you see statements to that effect, discard the posters as persons not worth arguing with; they are unable to engage in intelligent debate. When it was just a few whiners on Yahoo message boards and a bunch of bad reviews on Amazon, investors didn't pay attention to it. When respected writers in mainstream publications print articles about the issue then investors take notice. There is still not a single press release on the Intuit web site that addresses this whole issue. All statements by Intuit are their spokespersons' responses to published stories, or responses to questions from reporters. For all the changes they made, and they were good changes that addressed a lot of the concerns of customers, they still have not issued a press release.

Statements on message boards probably have zero effect on a stock price, unless there is unbiased information that supports the statements. I think that Mossberg's article probably was partially responsible for the recent decline of INTU stock. But INTU increased significantly, even after the first reports of C-Dilla, so it is ludicrous to believe that anyone would short INTU based on postings to a message board.

A high P/E is dependent on investors' projection of future growth. Investors' projection of future growth is based on their opinions of the capability of upper management. There are plenty of companies that have very good sales but have no growth potential so the stock does not trade at a high P/E. The falling stock price has nothing to do with the sales of TurboTax 2002, which by all accounts are up. It has everything to do with investors' and analysts' changing their opinion of growth potential. The use of Macrovision SafeCast is an indicator that there are serious management problems at Intuit.

Most prior users of TurboTax that are unwilling to purchase the 2002 edition are switching to H&R Block's Tax Cut Program.

TurboTax users need not be concerned about the quality of TaxCut. TaxCut was rated higher than TurboTax by the Wall Street Journal, New York Times, Christian Science Monitor, Barron's, PC Magazine, PC World, C/net News, Chicago Sun-Times, Seattle Times, Asbury Park Press, Hartford Courant, Kansas City Star, Indianapolis Star, St. Paul Pioneer Press, InternetNews.com, CNN Daybreak and CNN Headline News.

You can buy TaxCut on-line from many retailers. It is generally not discounted. With the Deluxe, Platinum, and Home and Business versions you get a free (after rebate) copy of the state program. You can see a comparison of the different versions of TaxCut at http://www.taxcut.com/comparison.html.

You can get a $35 rebate on the purchase of Microsoft Money (Standard, Deluxe, or Deluxe & Business) with the purchase of any version of TaxCut. Beware that the rebate is not valid if Microsoft Money (any version) is purchased at Costco or Sam's Club, and is only good for the standard edition of Microsoft Money purchased from WalMart. Costco has a standalone $30 rebate on their $47 price for Microsoft Money Deluxe, for a net price of $17. However you can do better at Office Depot with the $15 off coupon and $35 rebate.

Office Depot has a $15 off coupon for purchases of $50 or more. Buying the federal (deluxe) and state programs will get you to $49.94, but you need to be at $50 to get the discount, so add a box of paper clips to your order (these expired, do a search for new coupon codes).

Use coupon code 67379931 to receive this discount. I don't know if you can get this discount multiple times (i.e. for Microsoft Money as well), but I got a coupon in the mail from Office Depot as well for $15 off which I used in the store.

Another Office Depot coupon codes is 79404332, which is $20 off an order of $100 or more. They offer free shipping on orders over $50, or you can pick up your order at a local store.

I bought the Platinum version because I have rental property. Here's how my purchases added up (rounded to nearest $):

In-Store Purchase at Office Depot
TaxCut Platinum	$40
TaxCut State	$25
Rebate for TaxCut Platinum	$10-
Rebate for TaxCut State	$25-
Office Depot Paper Coupon	$15-
On-Line Purchase at OfficeDepot.com (store pick-up)
Microsoft Money Deluxe	$60
Microsoft Money Rebate	$35-
Office Depot Coupon Code 67379931	$15-
Totals
Total of Programs	$125
Sales Tax (8.25%)	$10
Total of Rebates	$100-
Total for Microsoft Money Deluxe, Tax Cut Platinum, Tax Cut State	$35

I was not planning to change to Microsoft Money, but for only $10 I'm giving it a try. I received all my rebates on February 18th.

Mike Block's Pro-TurboTax/Anti TaxCut Web Site--The Strangest Site I've Seen in a Very Long Time!

I was amazed to see the legitimate information on another web site (http://www.blocktax.com/turbotax_2002_boycott.htm) suddenly turn into a bizarre proclamation of "To me, this is Intuit's finest hour: Fast action to do right by customers."

He also has another page with a bizarre and unsubstantiated attack on TaxCut (see: http://www.blocktax.com/TaxCutAlternative.htm). Draw your own conclusions as to what caused this person to write this crap (but you will soon understand!).

He proclaims that TaxCut has more bugs. The basis for this claim is that he counted the number of Usenet threads for each one, searching for the name of the tax software plus the word "bugs," very scientific--not! Plus he includes positive experiences with Tax-Cut in his count for Tax-Cut bugs because in the post about Tax-Cut the poster complains about Intuit bugs in TurboTax.

He then multiplies the number of Usenet threads on TaxCut by four to adjust for the relative market penetration! We all know that the number of bugs a program has is linear with the number of users, right? If a program with 10 million users has 100 bug reports, and a competing program with 40 million users has 100 bug reports, it's perfectly obvious that the program with 10 million users actually has four times as many bugs.

After I picked myself up off the floor where I was laughing my ass off, I continued reading his drivel.

He proclaims that TaxCut is adware or spyware because if you don't opt out your user data can be sold (hmm, would any sane person NOT opt out?!). Still, it is nice that Intuit stopped selling user data. Me, I'd rather pay a lower price and opt-out than pay a higher price simply to avoid having to mark a checkbox.

Now I have trouble reading as I'm shaking my head in disbelief, but I press on!

He tries to imply that since TaxCut has no professional tax program that they may not have as knowledgeable people at the company. Clearly H&R Block has plenty of tax-knowledgeable people (maybe not in their field offices, but in their head office). While H&R block may not sell a professional tax program, you can be sure that they indeed have one that they use internally.

You thought it couldn't get more bizarre, you're wrong!

He tries to turn the issue of H&R Block being sued over its tax-refund anticipation loans into some sort of drug-abuse issue, but the language gets kind of murky and it isn't exactly clear what he's saying.

The site becomes less and less lucid but I can't resist continuing to try to decode it.

He then turns to attacking Microsoft as he tries to imply that because Microsoft and H&R block have no equivalent to Quickbooks that this means something (but he doesn't say what). He then states that Microsoft also has copy protected some programs and tries to tie this to the small rise in Microsoft's stock price over the past five years (on a side note, he states that Microsoft has the same type of copy protection present in TurboTax, which is not true), while Intuit had a much larger percentage rise (not sure what he's trying to say since you'd think that the larger stock price rise of Intuit would mean that they were doing better without copy protection).

The real reason for all these bizarre statements on his site can be found at another of his pages, http://www.blocktax.com where he states: "Now you can see that I really have friends at Intuit. I am one of only eleven charter members of the QuickBooks Customer Advisory Council. QB pays us to help make QB and its Certified Professional Advisor programs better."

Sad and pathetic. If I were an Intuit executive, I'd ask Mike Block to please stop trying to help! It's like a conservative getting a political endorsement from Jesse Jackson or a liberal getting an endorsement from Rush Limbaugh.