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The Earth observation (EO) market<\/b> now has a number of companies looking to offer services and solutions, such as GeoEye, DigitalGlobe and Astrium Services, among others that are all looking to carve out a niche in this increasingly competitive environment. The EO market has taken a very significant twist recently with the announcement that two of the main players in this space, GeoEye and DigitalGlobe, have agreed to combine in a deal worth around $900 million. The deal was announced in late July, and is expected to close either late summer or early fall. The combined company, which will be named DigitalGlobe, represents a major piece of consolidation in this sector.<\/p>\n
Government and enterprise users are driving revenues as the major buyers of EO services, according to Euroconsult. The analyst firm notes that sales of commercial data reached around $1.3 billion in 2010 and the industry has been growing at around 23 percent CAGR during the last five years, with strong demand coming from the U.S. defense market. Adam Keith, a satellite analyst at Euroconsult says, \u201cThe commercial sector is showing signs of increased development, particularly for location-based applications. In total, 83 percent of all commercial data sales are from optical solutions, representing approximately $1.1 billion in commercial revenues. The remaining 17 percent comes from Synthetic Aperture Radar (SAR) data solutions.\u201d<\/p>\n
The amount of capacity aimed at serving this market is also increasing. According to Euroconsult\u2019s latest research, 140 satellites were launched for Earth observation (including meteorology) between 2001 and 2010 from 26 countries (including commercial missions), compared to 298 satellites from 43 different countries anticipated between 2011 and 2020. Euroconsult also predicts competition for commercial data will intensify from both purely commercial actors and governments looking to tap into the commercial data market. It believes the number of satellites in operation offering commercial data to both government and private commercial customers will increase to more than 55 from 2015 onward compared to 28 at the end of 2010.<\/p>\n
GeoEye is planning to launch its GeoEye-2 satellite next year, which in theory will now be an asset of the combined DigitalGlobe\/GeoEye entity. GeoEye has generated around 65 percent of its revenues from defense, both internationally and domestically, but things are on the cusp of change. \u201cWhat you will see is that the breadth of services that we will offer that market will begin to change. The mix will move from imagery to higher-end information services. Commercial is in the nascent stages right now \u2014 there are some big opportunities there. We have had success growing with our partner Google, as well as some large international opportunities,\u201d says Brian O\u2019Toole, CTO, GeoEye.<\/p>\n
Aaron Crane, DigitalGlobe\u2019s vice president of product management, says a fundamental shift is taking place in the market. \u201cSatellite imagery was mostly reserved for the scientific community, but free online access has made satellite imagery ubiquitous \u2014 essentially used by everyone for just about everything,\u201d says Crane. \u201cWith the rise of social media, that same trend is now impacting imagery analysis, and we\u2019re now seeing a rapidly growing number of end-users, in all walks of life, becoming creators and consumers of geospatial intelligence. I think of this as the democratization of Geospatial Intelligence (GEOINT), and it\u2019s now driving several of our key R&D strategies.\u201d<\/p>\n
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While the government market will remain the most lucrative in the short-term, there appears to be a growing demand from enterprises across the board. Stephen Coulson from the European Space Agency\u2019s (ESA) Directorate of EO programs says, \u201cThere is increasing interest from private sector in the potential for EO information to help with their businesses. Two key sectors with recent developments are oil and gas in the areas of environmental impact, health and safety, and re-insurance for risk monitoring and assessment, especially floods. ESA have had previous collaborations with a few companies in these sectors, but within the last year we brought together a wider range of representatives from these industries in dedicated workshops to discuss how EO can bring additional benefit and map out a joint program of work over the next three years.\u201d<\/p>\n
O\u2019Toole notes that in this regard it is all about online access. \u201cGeoEye made some investments there in our online\/on-demand platform, and that enables us to provide our company content as a service model. That can be directly integrated into other enterprise platforms,\u201d he says. \u201cEarly on it was about imagery, now it is about services. With the enterprise market, we see services mainly integrated into the business systems and offerings of other partners. EyeQ is our enablement platform to help us move faster into growing these markets.\u201d<\/p>\n
Patrick Le Roch, head of GEO Information Services, Astrium Services, adds, \u201cThere remains strong interest in EO-based services where they can support business decision making and customers are starting to recognize the importance of features such as freshness, availability and integrity.\u201d<\/p>\n
Keith says he expects commercial data sales to rise from $1.3 billion in 2010 to $3.9 billion by 2020.This would represent a CAGR of 12 percent in the coming decade. Keith adds, \u201cDespite strong growth forecasts, slower growth is expected in the shorter term (though remaining around 10 percent).\u201d<\/p>\n
Crane says the commercial market is at the \u201ctip of the iceberg\u201d in terms of its potential. \u201cThe enterprise market represents a huge opportunity, driven by what I describe as the democratization of GEOINT. More and more businesses are finding new uses for adding value and better serving their end-customers using satellite imagery. One example is in the telecommunications industry where our imagery has played a significant role in the optimal placement of new cell towers,\u201d he says.<\/p>\n
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There is little doubt in the industry that the demand for EO data and imagery is increasing in developing markets. Keith considers regions such as Southeast Asia and Latin America to be ahead of the global average growth and expects them to help support these ranging applications. \u201cAfrica is also experiencing growth, but the economic and political drivers to support the use are more limited,\u201d says Keith. \u201cSignificant work in Africa for instance is still largely supported by inter-government development projects (such as from the World Bank) with less commercial value on the continent. That said, several African countries have established remote sensing centers which will help to educate and promote the use of EO data; and countries, which for instance are research-rich (such as Nigeria, South Africa, Algeria) are more active in procuring commercial data.\u201d<\/p>\n
O\u2019Toole highlights Latin America and Russia as particularly hot regions for EO services for government and commercial applications. \u201cSome of the emerging market opportunities are looking very promising,\u201d he says. \u201cGeoEye has been doing a lot of work in South America over the last 12 months. There is definitely more to come for us in Latin America.\u201d<\/p>\n
DigtalGlobe points to recent deals in China as evidence of its international play and Crane says that international governments have the same needs as the U.S. government \u2013 mainly updating maps and supporting geo-intelligence. \u201cFor example, DigitalGlobe recently formed new multi-year relationships with two of China\u2019s largest Internet portals, Baidu and Tencent, and a third with Yandex, the largest Internet portal in Russia,\u201d Crane adds.<\/p>\n
Another company that is targeting this market is MacDonald Detwiller & Associates (MDA), which recently made headlines for its daring acquisition of Space Systems\/Loral (SS\/L). However, with its Radarsat satellites the company is also a player in the EO arena. David Hargreaves, vice president and general manager, surveillance and intelligence, MDA notes that the company sees opportunities across the board, and not just in emerging markets. \u201cPlaces like China, India and a lot of other areas of Asia and the Middle East are seeing increased demand for EO data and solutions. I don\u2019t think that the more established countries in remote sensing are seeing less demand,\u201d he says. \u201cThere are other market sectors that are starting to emerge in established markets \u2014 the oil and gas sector is a good example. Most of the oil and gas business we do today is in and around North America, but that will go into emerging markets. Honestly, we are seeing growth in the defense sector in established countries; even though budgets are being cut, the demand for intelligence information and solutions is still growing.\u201d<\/p>\n
Hargreaves highlights the opportunities in Aviation in emerging markets where there could be a host of opportunities for MDA. \u201cToday, we do a lot of work around designing aircraft procedures, specifically in the areas of landing and take-off. We have developed software systems in those areas for the likes of the FAA,\u201d says Hargreaves. \u201cThe demand for good-quality geospatial data for designing good airport approach and departure procedures is growing very quickly, and the ability to have high-fidelity digital elevation models are a huge issue. For example, there are a huge percentage of obstacles such as cell phone towers and geospatial data can accurately tell you where the towers are and the height of them. We use Earth observation and remote sensing to do quite a lot of airport mapping nowadays, and their use is increasing. This is especially true when you get into emerging markets such as China and India that are developing a huge number of airports.\u201d<\/p>\n
For ESA, which has a different set of motives to commercial organizations, the opportunity for its services to be used in developing markets can be particularly compelling. \u201cIt is clear that there are and will be significant opportunities in these developing countries. In the last few years, ESA have been working closely with the World Bank, which has extensive portfolios of development investments around the globe. We have already completed the first, small-scale demonstrations of EO information in support of 15 individual World Bank projects, and the results have been very well received by the Bank project officers,\u201d says Coulson.<\/p>\n
However, while enterprises are showing more of an interest in these kinds of services, it is still the defense and government market that underpins a lot of the revenues in this sector. With governments looking to cut spending across the board, the market players here are faced with considerable challenges. Le Roch admits revenues from enterprises are not making up for a shortfall here. \u201cA key feature is the continuing high dependency on public budgets \u2014 very much highlighted now in these times of public budget crisis. We are not yet seeing a strong enough commercial potential to make up for reductions in government and institutional spending. Strong national government influences continue to be a significant factor in market evolution (for example through data policies, security, etc); and also due to \u2018closed\u2019 nature of many long-term high-value national procurements worldwide which can distort the commercial market.\u201d<\/p>\n
O\u2019Toole adds, \u201cWe are all watching what will happen with the U.S. Defense budget. The U.S. government part is still the largest part of the market today. I think independent of budget cuts, the government still has expressed a need and demand for not only imagery but analytics. I think there are still going to be plenty of opportunities.\u201d<\/p>\n
In Europe, ESA derives 70 percent of its revenue in this area from government agencies. These cover a wide range of services including land cover, urban mapping, oil spill monitoring and land motion for geological hazard assessment (seismic, landslides and volcanoes). Coulson adds, \u201cPublic sector has been, and are likely to remain the driver in demand for satellite environmental information, and it is for this reason that the joint EU-ESA initiative for Global Monitoring of the Environment and Security (GMES) is being constructed. This new fleet of satellites is purpose-built to provide the basis for a suite of operational information services in the land, oceans, atmosphere, cryosphere and risk domains to meet Europe\u2019s public-sector needs for environmental monitoring.\u201d<\/p>\n
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What is happening in the market now is that companies are enhancing their offering to enterprises and defense customers. With new capacity coming online, EO solution providers are looking to provide a deeper, more enriching experience to the end-user. The GeoEye\/DigtalGlobe combination will bring some very interesting combined services to the table.<\/p>\n
O\u2019Toole explains how GeoEye has looked to develop its service offering to customers. \u201cWe acquired a company called SPADAC. They are providing predictive geospatial analytics services to the special operations communities and defense agencies,\u201d he says. \u201cIf you think about what the market is really asking for, imagery provides the immediate situational awareness. You can see what is going on, but then what needs to happen you need to overlay on top of that what is happening operationally, such as who is living there, who is operating there and what are they likely to do next. So, by bringing those two things together, we will be able to offer customers much more insight around their areas of operation today.\u201d<\/p>\n
Crane once again talks of a change in terms of end-user needs here. \u201cWe are seeing a shift from customers needing the imagery alone to needing insight and analysis of that imagery, and an increasing need to get both as quickly as possible. However, many customers don\u2019t have a deep set of analysis resources themselves, so that is why we formed our Analysis Center, to provide that insight, and we\u2019re seeing a great customer response for those services. In parallel, we\u2019re making huge strides in getting both imagery and insight to customers faster. For example, last year we launched a new service called FirstLook, which monitors for crisis events worldwide and can collect and deliver fresh, up-to-date imagery of an event area to customers in as little as four hours. That kind of speed would have been unheard of just a few years ago.\u201d<\/p>\n
Le Roch says Astrium Services\u2019 short-term plan will be to strongly leverage its next-generation constellation of four new optical satellites and use these as the platform to provide new services. \u201cThis constellation, reinforced by a worldwide network of receiving stations will allow us to offer services based on an unprecedented combination of sensors and revisit capability,\u201d he says. \u201cWe recognize that there are a huge range of services and solutions that can be offered in the value added sector, we will therefore be looking to tailor our own offers to focus in specific domains where we have strong added value.\u201d
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The market could see heightened activity during the next few years, as new services and capacity come online. O\u2019Toole notes the amount of commercial satellites being launched into orbit to serve these markets. \u201cYou will see a lot of small satellites go up and being introduced. There will be a lot of capacity in orbit,\u201d he says. \u201cThat will enable the next generation of information services. You will see growth and more diverse offerings as people look to capitalize on all this in-orbit capacity. Capabilities will emerge that we have not even thought of yet, thanks to all this new capacity coming online.\u201d<\/p>\n
Crane adds his own perspective on future EO market trends. \u201cI see the analytics side of the satellite imagery industry growing increasing in importance, with insight derived from imagery becoming as important as the pixels themselves,\u201d he says. \u201cOur satellites provide imagery that often includes much more information than can be seen by the naked eye, so there will a growing opportunity to help customers gain full insight from the imagery.\u201d<\/p>\n
The EO market is not only growing, but also becoming more complex as more capacity comes online to serve both governments and enterprise users. As services become multi-layered, however, the demand placed on solution providers becomes more of a challenge. The big question is whether the commercial market can take up the slack now that the government market is showing signs of slowing down. Like many areas in satellite, the EO market has arrived at a new threshold and the powerhouse created by the DigitalGlobe\/GeoEye merger could lead the sector into a new era.<\/p>\n","protected":false},"excerpt":{"rendered":"
The demand for Earth observation imagery is increasing across the globe. The market is also entering a more sophisticated phase, as providers look to offer more than just basic images to enterprises and governments. The Earth observation (EO) market now has a number of companies looking to offer services and solutions, such as GeoEye, DigitalGlobe […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-82555","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/82555"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=82555"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/82555\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=82555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=82555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=82555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}