Sean Gorman (@SeanGorman) writes about the end of Platial and Fortius One’s recent experiences in crisis relief in his most recent blog post. In reading it, I was struck by the following -
crowd sourced data is playing an integral role in relief efforts. It is a role, though, that complements the traditional sources of geospatial information. The largest impacts we’ve seen is in the fusion of the two sources. The combination has incredible value providing baselines, context and temporal adaptability – resulting in a malleable abstract that can be molded to solve a myriad of disparate challenges.
I agree with Sean’s sentiments. There is no need to try and draw arbitrary bounds around the type or method of collection of geospatially-aware data. The data’s use defines its value. Let’s focus on solving challenges and creating value for our neighbors, stakeholders, citizens, and customers.
Photo by Alfred Eisenstaedt, taken on V-J Day, 1945 (from Life Magazine)
There have been some interesting conversations across the blogosphere on Google’s entrance into the basemap and navigation business. From an interested spectator point-of-view, I am a bit of a fan of the sheer audacity of Google’s mapping effort; creating a US basemap from scratch, building a navigation application, and rolling out a real-time sensor network (with 76 million devices) disguised as a mobile phone, all in the space of a couple of years. Well, that’s just crazy. However, as much as I am a fan, this event is just one more example of the impacts of rapidly changing technology in our field (Part 1), making previous niches obsolete and forcing individuals (James Fee) and companies (e.g. Cloudmade) to adjust business models to just survive.
Geo-powered apps are changing the game for developers
There were a couple of themes from these conversations that I found interesting. The first was represented by Peter Batty (and links therein), which could be broadly interpreted as “Content Matters”. That is, the cost (or lack there of) of the navigation application was less than important than the base content within it. The second theme was summarized by a podcast at Directions Magazine, which posited that the data didn’t matter. Adena and Joe’s point of view was that the application was going to overshadow the importance of the content. They felt that the application cost, functionality, and ease of use would generate more relative value than the content. I personally believe that both these points are two sides of the same business coin, and to be successful in this space you will have to have both great content, and a great marketing and delivery application.
Let’s start with the Batty et al.’s assertion that “Content is King”. In a frictionless marketplace of ideas and data, where the process of disintermediation has reached its peak, the lines of competition will be drawn around product price, branding (think Crest versus Colgate) and quality (think GM versus Lexus). This suggests that our market will continue to separate between the aggregation of (free) commodity data (10 meter USGS Digital Elevation Maps) and premium data (nationwide parcel data). I have been a proponent of premium content for a couple of years and I see it as a bright spot for geospatial professionals because good content tends to be localized providing niche geo-opportunities locally, across the globe.
Wall Street Journal's premium content drives growth
The Wall Street Journal has maintained its subscription-based revenue model all through the “content-should-be-free” era of the internet. It is now the only major newspaper in the US with a growing circulation, and is the nation’s largest newspaper by circulation. They demonstrate that the quality of content matters, and will continue to matter moving forward. Looking more closely at the difference in content provided by the #1 Wall Street Journal and the #2 USA Today, the Wall Street Journal might be considered a “premium” niche player, compared to the generic “consumer” news offer by the USA Today. Generic news may be found in a lot of places (for free). In the spatial industry, we might compare this to the “free” generic DEMS offered by the USGS and the “premium” high-resolution LiDAR surveys by companies such as Merrick. Clearly, quality content has value and people are willing to pay for it.
But Adena and Joe have a point. We consume digital content differently than other commodities such as toothpaste. Even if today’s premium navigation data becomes a commodity by virtue of the “less-the-free” data offered by Google, the data must still be delivered via a service and application that people wish to use. The consumption of content, and the value-added services built on top of the content, will depend directly on the quality of the application that delivers that content. In this case, the application will matter as much as the content. If either fails to deliver, the whole effort will fail.
While we may currently consider ourselves either data providers or application developers/integrators, I think our industry will move towards a Data-as-a-Service (DaaS) industry, where the data and applications are inextricably tied. I believe this will be the case for all platforms, including web, mobile, and desktop. And in this new DaaS era, the geospatial integrators may have an edge because they are used to thinking about data and applications simultaneously.
In addition, the economic process that is currently squeezing the revenues of integrators and GIS professionals may be turned to work in their favor, as the many sources of free, low cost, or open source software becomes their application supply chain. In the past, these integrators thought about their customer’s data and its integration within a proprietary mapping software stack. In the future, they have an opportunity to become vendors of DaaS, either for their customers, or for themselves. The combination of accessible data (low-cost or free) with low-cost applications and hosting will enable these professional to create premium DaaS niches, recouping the profit margins lost to the commodization of their IT skill set.
This is one path towards a new, hopeful future where the geospatial professional controls the fate of their destiny, rather than trying to survive on the leavings of giants.
This is my uninformed prediction, but it would be a bold move, backed by the National Research Council since 1980. It is the kind of game changing move that would help solidify their position as the number one search engine for localized business advertising.
A Halloween Treat - Gazing into Google's Future
I alluded to this possibility the other day when I looked at the possible importance of Google Map’s new parcel data layer and suggested that some mapping content that is currently very valuable will be given away for free in order to support a larger location-based advertising market. The release of their free navigation application for Android 2.0 seems to back these thoughts and suggests that mapping is just a means to an (advertising) end for Google. I believe the mapping community should get ready for more game changing moves.
Forbes also made the “free navigation” connection. It seemed pretty consistent with their overall strategy of building on their strengths to leverage into the localized search and advertising market. This local advertising market could be worth $40 B in new revenues to the industry. Since Google has ~70% of the current search related advertising market, a back-of-the-envelope estimate would make it worth ~$28 billion in new revenues, doubling their current revenues. Google has some room to make investments to secure this local search business that others cannot make, and they seem willing to push their advantage without regard to previous players.
The Forbes article specifically mentions a price per device for turn-by-turn navigation data of $5 – 10 per device. Worldwide mobile phone sales are on order of 300 M units, so if Google wanted to “own” the localized search and navigation space, it was going to cost them billions for the navigation data. So it appears they made a classic build vs. buy decision and came down on the side of build. We can argue about whether Google will be a “trusted” data source for navigation. However, the very fact that three very prominent “geonerds” in our industry are fixing Google’s maps for free suggests that there may be some value to the crowdsourcing of mapping data (see also – Open Street Maps).
The key to building a successful localized search and advertising service is the accurate navigation and business listings (and here as well). This requires highly accurate and timely cadastral data. For Google to be dominant in this space and double their revenues they have to solve the problem of accurate parcel data on a national scale.
The desire for a national cadastral map dates back to 1980 with the release of the National Research Council report, “Need for a Multipurpose Cadastre”. There are lots of issues as to why 30 years later we still do not have a national parcel map; and I believe some of these include the “ownership” and licensing of the localized parcel vectors as a revenue source for municipalities.
If Google really wants to create a national parcel map for navigation and business listing purposes, they will need to go through municipalities. They could obviously buy the data from Pitney Bowes or 1st American. These companies have built relationships with these municipalities over the years to provide high-quality cadastral data at the local level, which these companies then aggregate to provide a national-level geo-coding product. However, it does not appear that Google has bought their current parcel data from them; and considering that Google is leaving the existing navigation data providers NAVTEQ and TeleAtlas, it would seem that Google plan may be to go directly after the parcel data without the middle man.
So how do they get the parcel data directly from the municipalities without worrying about individual licensing with the 10,000s of local, county, and state governments? One approach is to commit to creating a national cadastre map, and then open source the project by giving yearly updates to the USGS National Map. What municipal GIS professional is going to argue against opening up their data to their users through an open source cadastre project that is backed by the NRC, federal government, and Google?
Google would still run the use and updating of “Google’s” parcel data via its APIs. They would still have the easiest and most recently updated service to drive their navigation and business listing services. They could sell “geo-services” directly to local and federal agencies based on their cadastral maps, which would save government agencies millions a year in maintaining cadastre data in databases that have little interoperability, i.e. a new business line for Google Maps Enterprise. It would also bolster their “Do No Evil” marketing, and perhaps keep the regulators off their backs (re: Microsoft in the 1990’s).
And oh-by-the-way it would speed their creation of a better turn-by-turn routing system and business listing service that would help them dominant a new $40 billion dollar localized advertising market. They could spend $1B on creating a self-perpetuating National Parcel Map, and still generate an enormous ROI on the expense.
Last week there was a brief twitter thread in the geo-community about cloningAdam Estrada. It started innocuously, but as such things often do amongst our chatter class of geospatial professionals, it degenerated rapidly. One could only imagine what the world would be like with multiple copies of a rabid Georgia Bulldog fan.
The technology for cloning GeoNerds has been developed.
This thread was followed by some great follow-up discussions from last week’s post on the new parcels in Google Maps (and see a better article here). It seems that our way of life in the professional mapping industry is going to change as a result of new data and technology that will be available at increasingly lower costs. That means that the players in the industry will have to change or die. Or put a little less morbidly, we will need to become increasingly more productive in order to stay ahead of the “free stuff” curve.
Yet, how do we become more productive with our time, e.g. make more money with less effort? Productivity varies across industries, and sectors within industries. Our industry can be basically broken down into three groups – software vendors, data vendors, and professional service vendors. In Adam’s case, he is in the professional service sector, working for Zekiah Technologies, and is in a similar position to many in the geospatial industry wrestling with the problem of being more productive.
The productivity problem with the professional service sector is that it is a consulting business. Revenues are generated as a function of billable hours, e.g. how many hours it will it take you to install an ESRI ArcGIS Server or build a map of Maryland. Therefore, to make more revenues, one has to generate more billable hours. Yet, the billable hours per person has an upper limit, say 40 hours per week (unless of course you are a lawyer, in which case it is greater than the 168 hours available to us mere mortals). And therein lies the conundrum, the professional services industry does not scale beyond the bodies you can hire. This means in the good times your upside is limited to the amount of dollars per hour you can charge times your total workable hours. And in the bad times, you have the fixed overhead of salary support for someone who isn’t fully billed out. Large downside risk, limited upside potential. Not the best of business combinations.
Given this combination, it is easy to see why Adam might wish to clone himself. If he could scale the number of hours he could work to the available billable hours he could sell, and not incur the additional overhead and risk, Adam would be less stressed, and would make more money. Of course he may have to share his Bulldog tickets with his clones, but there are disadvantages to bulldog cloning that I’ll leave for your imagination.
The geo-data industry sector is different. A lot of effort goes into developing the data product, but once developed this product may be sold multiple times. This make-once, sell-many product model is a great example of a scalable business. Like the software business, the cost of development is incurred upfront, after which the only marginal expenses are sales and marketing. In essence, instead of cloning yourself to garner more revenues, you clone your product (which is a bit easier than cloning yourself with today’s technology).
The problem with the data business model is the upfront costs, as well as the sales and marketing expenses once the data product has been produced. These costs can be significant and there is always the risk of, “if you build it, they won’t come.” So while it scales well, the risks are high. Given this risk and expense, many geo-professionals choose to continue along the path of lower risk, but lower upside, consulting business; and like Adam they dream of cloning themselves while working late in the evenings, instead of watching their favorite college football team.
Is there another path? I would like to think so, but it requires a blending of the data and professional services business model. In this new path, people like Adam, who create content (or advanced data transformers and geospatial analysis tools) on a daily basis for others, would retain an explicit stake in their days work at creating valuable content. Much like songwriters, who retain residuals on the songs that they write, GIS professionals who create products for others could retain royalties and derivative rights on their products. These royalties and rights would allow them to resell their works in a manner that would generate new revenues, which would scale far better than the original hours required to produce the original work.
There would need to be some trade-offs for the original purchasers, e.g perhaps they get a lower price for the job if Adam was able to retain the derivative rights to his works. In this case, Adam could bet a little of his current revenue in the hopes of generating a better scalable revenue stream. This would be a win-win for both parties, as the original purchasers would be getting a product a lower cost (and thereby increasing their overall productivity); and Adam would be able to generate more revenue with less effort, which could possibly create a new business model for greater success in our industry.
Word is Google Maps did >$100M in enterprise sales last year (I got this from multiple sources). A significant revenue number in the mapping industry. Yet, while this is certainly a big number, it represents a drop in the bucket compared to their $20B per year advertising business. Heck, they made more than $100M in the 2Q:2009 just from foreign currency exchange risk management efforts.
Why bother with such a small geo-related business, when to move the revenue needle they need to look at >$1B businesses? Maybe from Google’s perspective’s it is easier/cheaper to build a $1B business from a $100M business, than to have to buy a $1B+ businesses to generate earnings growth. However, here is what I believe. I have seen estimates from Microsoft and others that suggests the hyperlocal advertising business is worth $25 to $60 billion (e.g. this report on directional advertising at $41B). Getting the navigation right helps build the traffic to this advertising business. Parcel level geo-coding helps make sure the addresses are correct for navigation. A green-field $40B directional/hyperlocal advertising business is right in Google’s primary area of focus. Everything else (i.e. other geo revenues) may just be gravy.
Google is building geo-related services, and selling them at much lower costs than traditional service providers, because of the synergistic revenue generation from the advertising business. If I am right, they will probably be taking a similar direction in the mobile market, including support of their Android OS. This is also very logical and consistent with their advertising model as good geo-location for hand-held devices combined with hyperlocal and augmented reality applications will drive future advertising revenue opportunities.
What does this mean for traditional mapping data vendors such as TeleAtlas and NAVTEQ (as well as parcel data providers)? Probably not much in the very near term as the directional/hyperlocal advertising markets are mostly untapped by these traditional vendors. In addition, the quality of the data for advertising-relevant navigation probably doesn’t need to be as sound as for insurance, e911, legal, etc., type businesses. It is also unclear if the licensing and the most up-to-date data from municipalities are properly addressed in the new Google APIs. But if the price point is right and service is “good-enough”, these services could encroach on the more traditional markets of traditional commercial data vendors.
What does that mean for the rest of the geo-market participants, including software, collaboration, game-playing, and other crowd-sourcing groups hoping to build geo-related revenues. It means GOOG = BORG. They have a mission: “to organize the world’s information and make it universally accessible and useful,” as well as to build revenues from advertising. The phrase, “Assimilate or Die” in the mapping space is not evil, it is just economic Darwinism. Google is chasing a big market, and they are going to leverage their heft and dominance in the advertising space by building better services in the mapping space. They will create and give-away or under-sell geo-related products, which represent large amounts of revenue in geo-related industries, for no other reason than to dominant the directional advertising market.
If you don’t believe me, just look at the impact of Microsoft and Google on the wide-area imaging market.
Moreton Bay Research Station Computer Room trying to unlock the mysteries of physics-based inversion algorithms
I am still involved with various spectral mapping efforts from aircraft and space. I spent the past week at the Moreton Bay Research Station on North Stradbroke Island in Queensland, Australia with a bunch of people trying to determine sea grass distributions from imagery. Most of the time we were locked into this room –
But I was able to get out one day to look at the environment we were trying to map, with guys who actually know the environment and can tell one form of sea grass from another.
One of the sea grass species (Cymodocea serrulata) we were trying to identify from aircraft imagery.
Below we were engaged in putting the “map on the pixel” instead of the traditional other way around (I am the geek in the hat).
I rarely write about such endeavors, mostly because of time, but a thought crystallized in my mind during this trip that is relevant for what we are trying to do here. The mapping industry has created some expensive tools (consider that the LandSat follow-on is likely to be over $700 million). Yet the “last mile” of knowledge is always created by someone in the field, applying their skills and knowledge to the data coming from the survey instruments.
Our mission is to make the human part of this process more efficient and more rewarding. When we succeed in this mission, we will be creating a healthier place to live, with better funding for the experts to pursue their studies and acquisition of knowledge.
On the left, Chris Roelfsema is showing where we are on the map. On the right, we are "putting the map on the pixel".
I am trying to synthesize my thoughts on the GeoWeb 2008 conference, as well as things that have been coming at us since the Safe Software press release. One of the thoughts that continues to rise to the surface is that the GeoWeb is not an independent section of the internet, but rather a niche location in the web; a niche section that perhaps is being rolled into its core.
I think I heard a similar statement from Ron Lake at the GeoWeb conference (“The GeoWeb is the Internet”). James Fee has picked up the theme in a recent post. The comments to that post seem to have echoes of the neogeography vs. GIS clashes. Yet, there does not appear to be any of the vitriol associated with this thread compared to past debates. Maybe we are moving past the divisions and into the realm of synergy between the different focuses of the groups.
And then bang, you see an announcement by ESRI and Microsoft Virtual Earth offering Virtual Earth products inside ArcGIS Server. Talk about a fusion of GIS and neogeography. You will have to purchase a Virtual Earth license, so it fits within Microsoft’s tradition licensing revenue model, but still, Virtual Earth is more about the future of yellow pages advertising than about GIS or GeoWeb services. At least according to Microsoft’s Vincent Tao at the Location Intelligence 2008 conference.
So where do we go from here? The internet is “evolving”. It started out as a robust means of communicating and sharing supercomputer resources (see ARPANET). It has become a ubiquitous communication, processing, and storage array that touches nearly every aspect of our daily lives. In its evolution to date, it has rolled through many businesses (e.g. telecommunication, financial, advertising, etc.), upending their business models, to create new services, products, and business opportunities. I think the spatial industry is just the next industry to overwhelmed (shaken? stirred? smashed?) by the evolution of this omnipresent technology in our lives.
Location awareness is just the next information stream to be absorbed by the massive data ingestion services that reside within the internet. If you own a mobile phone, your position on the planet is already trackable to within meters (see Enhanced 911). New business models are started daily on using these feeds as new Location-Based Services (LBS). As a consumer, geo-spam is a concern, but you can always turn-off the buzzer. But new models built on real-time crowd dynamics or “mobbing” offer a whole new approach to targeted marketing and advertising (see Peter Batty’s presentation at GeoWeb as an example).
Would you have seen this coming 10 years ago? It’s clear Microsoft did not see Google coming, and they had some very smart people trying to predict the future. I think we in the spatial data industry are facing the fertile grounds that lead to similar revolutionary technologies. Such environments lead to the classic innovator’s dilemma for business organizations – how do we maintain our current revenue stream, while creating new, faster growing opportunities so that we do not end up as the last maker of horse drawn carriages?
On Friday, Agriculture and Lands Minister Stan Hagen announced GeoBC, a government organization, will provide 24/7 access to the province’s geographic database in partnership with Google. This information will be available online at geobc.gov.bc.ca and from Google Earth.
This is a great opportunity for the government to disseminate its geo-content through another portal. The deal allows the BC government to follow its mission to best serve the public that originally paid for the geo-content.
However, if you review what is happening in Hollywood with respect to writers and actors demands for a greater share of the digital reviews from marketing their products through non-traditional portals, i.e. the Internet, I believe that there may be storm clouds on the horizons for geo-content producers.
For Google, it is a great way to get content with which to build the LBS business that will eventually sell advertising. Yet in its traditional business, Google pays referral fees to content providers for other types of content, such as blogs, using Adsense. It is unknown whether they are paying anything to the BC government, but the geo-content creators will receive nothing.
One could argue that the geo-content creators have already been paid. But this is the same argument used by the studios in the writers strike. I think that this may be a future issue for our field.
How do you make a geospatial exchange a reality? You find great content providers to bring their wares to the market. Aerials Express (AEX) is one of those great content providers. With 420,000 square miles of high resolution aerial imagery over major metropolitan areas in the US (see map below), AEX brings base map content to “prime-the-pump” in the derivative product marketplace.
Christopher Warren and Bill Landis at AEX have been great. Their listings of AEX products address a big niche in our industry. High resolution imagery that can be physically acquired and manipulated with an explicit license to resell derivative works. Bill’s quote from the Press Release -
WeoGeo is an excellent opportunity for our company, said Bill Landis, President of Aerials Express. We are looking to WeoGeo’s advanced technology and unique distribution model to enhance the availability of our products into a wider range of GIS related markets.
It says a lot about the potential of an exchange-based market for our industry.
We will do our absolute best to make the market technology easy to use for search, discovery, and product acquisition. Its success will increase productivity and margins for all of its participants. Today, we mark its beginning.
There is a nice discussion happening on James Fee’s Blog about Web Mapping Systems and Services and the future of hosted mapping services. I was reading it and thought back to an interesting Wall Street Journal article on Monday about Circuit City that said same store sales in December fell by 12% in the US. While this news was depressing for the stock market, the silver lining for the geo-community was that navigational products were the only product line with increasing sales over the period.
Geo-devices are becoming more ubiquitous. The shear number of curious and talented people moving into our industry combined with these devices will drive product and service innovation in directions that may not be completely clear at the moment.
Converging with the mass market penetration of geo-devices and geo-content (geoware?) is the cloud computing efforts by AWS (and soon to be others). While the production of quality mapping today may require high end desktop workstations and servers, I think that Moore’s Law is eventually going to allow our field to produce geo-content and services far more easily, leading to a feedback into future product innovation. How we in the professional community create products and services today may be radically different in the future.
I offer this anecdote – today, after 10 years of running a Microsoft Exchange Server for our email requirements, we switched to Google Mail Premium. Over the 10 year period, we incurred costs of $10,000s, possibly greater than $100,000. These costs included licensing, hardware, server room, service personnel, etc. Our spam filter alone on the MSFT Exchange Server costs us $35 per year per mailbox. Our costs for Google Mail Premium service is $50 a mailbox per year. It is an easier to use, cheaper to implement, and offers more robust service than the Exchange product.
I think there might be parallels for our industry in this anecdote. It is probably a good exercise to be thinking about what products might be replacing the ones we are using today.
The future of GIS, geo-content, geo-entertainment, etc. will belong to those who can think outside of the traditional methods of production and product delivery. For historical evidence of the difference between companies that focus on the future and those that focus on their current narrow niche, look at the change in market capitalization of Trimble (TRMB) and Garmin (GRMN) over the last decade.
This is a great opportunity for the government to disseminate its geo-content through another portal. The deal allows the BC government to follow its mission to best serve the public that originally paid for the geo-content.
