Acquires Cloud Encryption Firm to Secure its Cloud Offerings

by Trefis Team
Rate   |   votes   |   Share (NYSE:CRM) is the leading provider of on-demand cloud based CRM (customer relationship management) software. Besides CRM, it also has several other offerings like,, Chatter and AppExchange. It competes primarily with SAP (NYSE:SAP), Oracle (NASDAQ:ORCL), Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM). According to reports, has acquired a cloud security firm, Navajo Systems, for approximately $30 million. [1] We currently have a $124 Trefis price estimate for, which implies a 5% upside to the current stock price. CRM and non-CRM cloud services account for more than 90% of our $124 price estimate.

With Navajo, Plans to Boost Security of its Cloud Offerings

With the growing popularity of cloud-based software and on-demand offerings, data security has become a major issue for most cloud software providers. Customers are becoming increasingly wary of storing confidential, corporate data in the cloud, and expect guarantees from providers about the safety of their data.

Navajo Systems used to provide encryption services for some customers allowing them to retain control of their data using its Virtual Private SaaS (VPS) technology. By acquiring Navajo, hopes to assure customers about the security of their stored data and attract additional customers for its SaaS offerings. While this acquisition may not have any direct impact on sales, we expect it to positively impact the adoption of’s cloud offerings in the long term.

We expect the global cloud computing market to grow to $400 billion by the end of our forecast period as indicated in the chart above. While dominates the cloud based CRM market, its market share in the overall cloud market excluding CRM is currently only about 0.27% signalling plenty of room for growth.

Check out our complete price analysis for

  1. Acquires SaaS Encryption Provider Navajo Systems, eWeek, August 26, 2011 []
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