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 ( CRM), Microsoft ( MSFT) and Oracle ( ORCL).

However, there could be an upside of more than 5% to the $50 Trefis price estimate for SAP's stock if Sybase could help SAP maintain its market share in software applications market rather than the decline that we forecast.

You can modify our forecasts above to see how improvements in SAP share as a result of Sybase could impact SAP's stock.

You can access our updated SAP model, which includes Sybase Software, here.
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