37signals and Zoho, I love what you're doing. But I see a imminent "killer" web 2.0 app is coming – and I don't see it on your web sites. The personal and small business accounting service market is chomping at the bit to take reign as the next killer 2.0 service, second only to webmail itself. And I can't wait to start using it.

We're already used to it

There are so many reasons this niche fits better than any of the productivity suite conversations that's commonly being held as the next contender. Quickbooks, Quicken, Peachtree, and Money have had a web-like interface for nearly a dozen years. And they've even been advertising in their products for a good while now. The navigation of the small business and personal accounting package consists of step-based wizards, tabular lists, and tabbed entry dialogs. And most of them are peppered with icons and graphics which are more customized and web-looking than the standard operating system control sets. Even the most stubborn amongst their users could be switched over to a web app, without even knowing that their software is running on a remote server.

And the banks too have been readily providing Internet-based information feeds for years, and have done a excellent job teaching their public, the virtues of web-based finance and convincing them of the security of the Internet. Indeed, the services have been so accessible, that its hardly uncommon for people to check daily their accounts at their work and during their lunch breaks. Indeed, people have grown to rely and use the accessibility that the service will provide – and the service still doesn't exist yet!

Then why aren't we already online

Well, certainly the 2.0 movement and application as a service trend is new. Buts thats only a small part.

The truth is that there are web based accounting services out there already, but they're littered with unacceptable shortcomings. The field is very much reminiscent of the pre-hotmail web-mail days. Here are the big gripes, in no particular order:

• Active X – Even one control is one too many!
• Pay-to-use – The cat's out of the bag with software, especially as a service. For the average user, a reoccurring fee-based service is not even worth the time to demo, let alone use. Unless they're already hostage to your software, people are expecting free!
• Silo architecture - No incentive for service and information interoperability through soap or otherwise? No incentive for me to trust your service. Maybe the 'average' user doesn't (yet!) care about this one per-say. But with the web services of today its all about the buzz, and you're not getting it of you're not playing fair. If you're trapping consumers , instead of earning users, the 'consumers' you do want to target are never going to hear about you from the propeller heads.
• Name recognition – This is a tough one, for something like financial information, I don't see a company named Quickbookr passing the trust test. It might, and certainly 'Hotmail' went from unknown to defacto almost overnight. But I'd bet there's value in a name brand institution on this one. So though a newcomer might actually provide a valued service, it probably needs to be acquired, or well-aligned by a trusted name become it becomes ubiquitous.

Oh yes, there's also the biggie: Crufty, Proprietary, legacy data! Too many existing users have years worth of accounting data tucked into the closed vault of one of the established desktop software purveyors. And without the ability to import this into a new solution, they're not about to adopt something new anytime soon. This is probably the biggest development expense for any newcomers to the business, and probably the biggest hurdle before widespread adoption of web-based accounting. This feature isn't absolutely required to grab up the low-hanging businesses and users, but for those premium customers, its a must-have.

Why now, is the market so ready?

Well, the short of it is 2.0 and its hype. And the long of it?

There's a new round of VC, and there's some fresh blood in the software as service market. Too, google and a few other companies have started to find really successful models of web-based advertising. There's money to be made giving away services, lots of it! And the very nature of finance software immediately lends itself to the by-now entrenched web marketing niches. We're talking:

• Mortgages & Mortgage Refinancing
• Auto Loans
• Debt Consolidation
• Stock Brokerage and Financial Investment service integration
• Checking & savings account peddlers
• Credit Card providers
• Tax preparation services

And thats just the easy ones off the top. With ripe access to individual's financial data, there's no end to the opportunities. There's plenty of room for a commission-based referral model as well as a pay-per-click model of advertisements, á la google's sponsored links.

So advertisers, who are you going to target? Are you going to market to "Families with two or more dependents, paying for private education, with the eldest dependent being in his senior year of high school" ? How about "Singles with a steady paycheck for the last five years, with a personal income of $75,000 or higher, not making car payments, not a homeowner, and graphing their savings account projections" ? The list goes on and on. Its a good deal for consumers, and a good deal for advertisers.

So who's going to do it first?

Hopefully this isn't going to be a winner-take all service, like auctions and web search. But there's a definite first-mover advantage.

Off the bat , there's who's already doing it. Intuit or Peachtree could tackle this market overnight. But they won't, it cannibalizes their existing core revenue stream, and that's all there is to it. Yes, I know they're offering a mickey mouse web service already – refer above for the major reasons why its doomed.

The Ebay & Paypal duo would be a brilliant candidate for this one too. But they've yet to take on such programming efforts in the past. And it's very uncharacteristic of them to provide any service that is not immediately suited to the promotion of online auctions and the core brand of Ebay.

And for the champions?

Microsoft stands alongside Intuit & Peachtree as the most eligible winner to take this market... if they don't shoot themselves in the foot. I'd be very surprised if Microsoft Money "2.0" wasn't right around the corner as it stands, but my bet is that it violates at least a couple of the encumbrances mentioned above. Nonetheless, the service is enticing enough that even if it does violate the rules a little bit, its certainly going to be a viable upgrade for their existing Microsoft Money customers. And being a fully promoted Microsoft venture is a force to be reckoned with.

And for google? Well certainly I've got an affinity for this company, and there's a lot of possibility for them here. Integration with their existing base of advertisers, and even further, the integration possibilities with google checkout, charts & finance is enticing. It tough calling out this company, and certainly they've not indicated in the slightest that they're working on this. But you can never tell with google, and certainly its a option for them. One I'd find hard to believe has not been already evaluated thoroughly.

There's an elephant in the room!

A new market is seems just about ready to explode, and all someone needs to do is grab it! There's probably not too much for us to do but sit back and watch . Right now, I'm pegging Microsoft with the first mainstream entry into the market. But its a big market. And I'm sure there's competition looming somewhere right behind.