We expect Salesforce.com (
CRM
) to continue to increase its share in the Customer Relationship
Software (
CRM
) market, such that it surpasses its competitors SAP (
SAP
), Oracle (
ORCL
) and Microsoft (
MSFT
) and becomes the market leader by the end of Trefis forecast
period.
Salesforce.com CRM market share has increased at a rapid pace
from around 7% in 2006 to around 13% in 2009, and we expect it to
continue to increase to reach to around 25% by the end of Trefis
forecast period. Below we look at a potential 5% upside and
downside scenarios for our CRM market share forecasts.
We estimate that CRM software accounts for around 63% of the
$128 Trefis price estimate for Salesforce.com's
stock
, which is about 5% below the current market price.
+12% upside - CRM Market share rises to 30%
We believe that Salesforce.com will benefit from the fast growth
of cloud computing CRM software market. The favorable factors for
this tremendous growth are speed and ease of implementation and low
total cost of ownership. The global on-demand CRM software market
has grown from less than $500 million in 2005 to $2.3 billion
in 2009, representing an average annual growth rate
of 46%, compared to single-digit growth for the on-premise
segment of the CRM software market.
There could be an upside of about 12% to our estimate for
Salesforce.com stock if its market share increases at a faster rate
to reach 30% by the end of Trefis forecast period.
Drag the trend line above to see the sensitivity on stock
price from changes in market share
- 10% downside - CRM Market share rises to 20%
Although we expect cloud computing CRM to continue its rapid
growth, security concerns remain due to the fact that the data on
the cloud resides over the internet and companies may be reluctant
to use it. This may discourage a few sectors like the financial
sector to adopt cloud computing software due to data sensitivity
and regulatory issues. Hackers and phishing attacks have time and
again hurt the credibility of cloud-based networks even though
companies like Salesforce.com have employed security measures like
data encryption, Secure Socket Layer techniques, and firewalls to
protect data.
There could be a downside of more than 10% to our estimate for
Salesforce.com stock if its market share increases at a slower rate
to reach 20% by the end of Trefis forecast period.
You can see the complete $128 Trefis Price
estimate for Salesforce.com stock here
.