SAP (SAP) recently acquired Sybase (SY) for $5.8 billion. Sybase, which primarily derives revenue by selling database software, also sells software for mobile phones on which businesses can deploy software applications. SAP, on the other hand, develops software applications for things like resource management and customer relationship management.
We believe this acquisition will benefit SAP's market share in the applications software market as it provides SAP an opportunity to satisfy business needs for real-time, mobile access to its business applications. By leveraging Sybase, SAP can better deliver its business applications to smartphones like the iPhone and BlackBerry.
Such capabilities will make SAP's applications more appealing to businesses and help the company to slow expected declines its software application market share.Sybase Could Benefit SAP's Applications Market Share We expect SAP's share to decline in two of the most important software applications markets: Enterprise Resource Planning (ERP) software and Customer Relationship Management (CRM) software. ERP and CRM software constitutes more than half of the $50 Trefis price estimate for SAP's stock. ERP software ERP software implementation helps companies integrate different systems with no common interface. For example, in a bank, if the credit card and the savings account system are two different systems, it could create potential reconciliation issues for the bank. ERP helps integrate these systems and solves these issues. CRM software CRM software helps companies provide a clear perspective of who their customers are, and what are their requirements. This results in increased customer satisfaction and increased sales for companies. Sybase Makes SAP's Apps More Appealing We believe that SAP will continue to lose share in the ERP and CRM market due to increasing competition. We expect SAP to lose some share in the ERP market to smaller players like Infor and Sage, and we forecast a decline from about 26% share today to 24% over our forecast period. Similarly, we expect SAP's share in the CRM market to decline from about 22% to 19% as a result of competition from players like Salesforce.com (CRM), Microsoft (MSFT) and Oracle (ORCL).
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV