Xero + QBO share just 2% market penetration in U.S. accounting software [chart]

From Xero's October 2014 Operating Update

Xero presented their latest Operating Update on Thursday. I was struck by this chart from the slides.

As you can see in the chart, Xero and QBO together have a market penetration of close to 2%. That's in a total market of 29 million small businesses in the United States. The market penetration is less than 12% if you only count businesses already using desktop software. Apparently 24 million small businesses don't use accounting software at all.

What does this mean for bookkeepers and accountants? This means that there's a huge opportunity in converting users of desktop accounting software to the cloud. There's also a huge opportunity in setting up businesses that have never used accounting software before, period. 

Who are these businesses who don't use accounting software? Perhaps they've never seen the advantage in using complicated desktop software. Maybe these are the clients who just toss a shoebox full of receipts and bank statements at their CPA each year. Whoever they are, they represent a large, untapped market.

Blake Oliver

Los Angeles, California, United States