For its fourth quarter of fiscal 2002, Pivotal has announced a rise in total revenues to $19.1 million from $17.7 million in the previous quarter. Overall, chief financial officer Divesh Sisodraker told CRMDaily.com, Pivotal had a pro forma net loss of $800,000. "That was an improvement from the prior quarter," he said.

Where Are the Big Deals?

Pivotal CEO Bo Manning told CRMDaily that the company's relative fiscal health is due to the fact that its focus is on the mid-market. "Small business is a great market also -- it is just a different market with different needs," Manning said. "So is the Global 2000 market. We are active in a unique and growing market that is underserved."

Mid-market CRM vendor Onyx also registered positive revenues: $18.5 million, up from $14.6 million in 2002 Q1. While formulas for success or failure are rarely cut and dried, it is clear that the mid-market is the sweet spot in the CRM industry these days.

"This quarter's earnings reflect just how delicate of a balance there is in the equation of profitability for CRM vendors," Louis Columbus, senior analyst at AMR Research, told CRMDaily. "Clearly, companies relying on the largest deals of $5 million or greater are the ones struggling the most right now, as those deals are all but gone."

Mid-Market Reign

While some vendors say that these trends are a short-term reaction to the current economic environment, other industry watchers believe Pivotal's and Onyx's revenues -- not to mention Siebel's recent woes -- are indicative of a fundamental shift in CRM buying patterns. "The era of elephant-sized deals is gone," Columbus said. "The line-of-business manager is becoming a dominant force in new software sales."

Other analysts, too, noted the rise of the mid-market and small business segments. Gartner analyst Joe Outlaw told CRMDaily that they will be the fastest-growing markets in the CRM industry once the economy picks up. "We think the mid-market is under-penetrated," he said. "Right now, only 20 percent of these companies have implemented some sort of CRM system."

The Aberdeen Group, for its part, also suggested that the mid-market is poised to become the fastest-growing segment in the CRM marketplace.