Potential 5% Upside / Downside for Salesforce.com's CRM Market Share

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.

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 again and again hurt the credibility of cloud-based networks although companies like Salesforce.com have employed security measures like data encryption, Secure Socket Layer techniques and firewalls to protect data.