Room for growth in CRM market?

Do you think there is room for more CRM vendors in this market and economy? What about those that concentrate on vertical solutions for specific market segments?
According

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to Gartner Dataquest, CRM software vendors are struggling to survive in a new market environment plagued with reduced license revenue. End users are in a buyer's market, negotiating discounts and terms across the board, which will result in lower pricing standards for the next several years. Over 70 percent of the vendors are in reduced valuation scenarios, while many have extreme viability issues. Outside of the "gorillas," the majority of smaller and midsize vendors are living off diminishing cash, which will result in demise for some and acquisition for the lucky ones. The following scenarios are likely in 2003:

- Continued price reductions across the CRM software market
- Buyers will continue to focus on smaller projects
- The focus on new product sales will continue to be based on point solutions and rapid returns
- Vendor failures
- Acquisition of several key CRM software vendors by enterprise application software (EAS) providers


CRM application software vendors are beginning to focus on verticalized applications in many areas to increase sales. Vertically packaged applications are designed for a specific industry and are designed to decrease customization and ease implementation. Many of the smaller industry markets for CRM will see moderate growth, but the market will still be dominated by the four top industries - finance and insurance, information/telecom, process manufacturing and discrete manufacturing.

This was first published in May 2003

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