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Sage, Intuit or Microsoft: which software giant makes our portfolio?

Technology screen showing computer software

Sage, the UK’s largest software firm, is just one eighth of the size of its closest listed peer Intuit, which in turn is just one fifteenth of the size of the largest US software company, Microsoft. The UK has never managed to thrive in the software market to the same extent as the US and the FTSE’s biggest tech companies look like minnows in comparison to their stateside peers. But in terms of quality, growth potential and dominance in its own market, Sage can just about hold its own and that makes it just as interesting an investment proposition as its much larger American counterparts.

Same but different

Sage (LON: SGE), Intuit (US: INTU) and Microsoft (US: MSFT) all thrive off the fact that businesses need good software to operate smoothly in the digital age. The former two companies focus on software products which cover accounting, payroll, human resources, enterprise management and banking. Sage says, “it helps you connect your workforce in a new way”. Intuit says it allows customers to “prosper by delivering financial management and compliance products and services”.

Microsoft stands alone with a software suite that is almost ubiquitous around the world. Its Outlook and Office products are so consumer facing they don’t need explaining here, while Azure and Windows are the underlying platforms which allow many other types of technology to operate.

While Microsoft’s products are used by almost everyone, Sage and Intuit are more targeted. Sage’s software supports companies of all sizes in a market which management estimates is worth $33bn (£25.9bn). Intuit focuses on consumers, small businesses and the self-employed and…

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