Siebel Buys A Head Start In Hosted Market

Siebel Systems Inc. hopes an acquisition valued at up to $70 million can jump-start its entry into the hosted customer-relationship-management market. Last week, Siebel said it will buy one of the pioneers of that market, UpShot Corp., which has about 8,000 people using its hosted CRM service.

The acquisition comes just two weeks after Siebel said it would launch CRM OnDemand, a hosted service it will manage and market jointly with IBM. "We will not enter a new market unless we're satisfied we're going to get a greater than 50% share," Siebel chairman and CEO Tom Siebel said during a conference call last week.

Siebel executive VP David Schmaier says the company followed this same enter-then-acquire strategy in the markets for call centers, marketing automation, and product configuration, in all of which Siebel now claims a greater than 50% market share. It has also done so with CRM analytics, where the company has a 42% market share.

Last week, Siebel reported that third-quarter sales grew 11% to $357.1 million, but it lost $59.3 million. Excluding restructuring charges, it would have earned $16 million. The company last week also disclosed the acquisition of enterprise incentive-management software supplier Motiva Inc. for $3 million.