Worldwide CRM new license revenue totaled $2.8 billion in 2002, a 24.7 percent decline from 2001 revenue of $3.7 billion. In 2001, the market declined 6.4 percent.
Gartner attributes the decline to a slow economy, combined with changes in buyer behavioral and priorities. "Smaller deals, tactical projects, longer sales cycles and heavy competition have caused CRM vendors to struggle," said Tom Topolinski, vice president for Gartner's worldwide software applications research group.
Siebel continued to hold the top spot based on worldwide new license CRM software revenue with a 24.9 percent market share, but its market share dropped more than three percent in 2002. Rivals SAP and PeopleSoft, however, gained in market share in 2002.
Gartner reports that in North America, new license CRM software revenue declined by 27.6 percent. Western Europe and Asia Pacific dropped 22.4 percent and 15.2 percent, respectively.
Does this decline in software licenses spell good news for for hosted CRM vendors such as Salesforce.com, a San Francisco-based ASP that aggressively targeted Siebel with its "No Software" advertising campaign? Not really, according to Rob De Sisto, vice president, CRM, at Gartner. De Sisto described the effect of Web-based ASPs on the decline as "very neglible."
"You just have to look at their revenue figures," De Sisto told ASPnews, referring to Siebel's $1.6 billion in revenue in 2002. Privately held Salesforce.com's doesn't report financial results, but estimates are that the company's 2003 revenue will be in the $100 million range.
De Sisto said the hosted CRM applications haven't become a factor in large enterprises, but added that as companies such as Siebel, SAP and PeopleSoft move down market, the ASP model begins to make more sense. There, companies such as Salesforce.com could do more than nip at heels of the software giants.
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