As Good As It Gets
for Earth Imaging
By Edward A.
Jurkevics, Chesapeake Analytics Corp. (www.chesanal.com),
Earth Imaging Journal (www.eijournal.com)
There is cause for optimism in
the Earth imaging and geospatial industry for 2006. A solid economy, the
emergence of mass markets and industry maturation all point to a banner
year for business.
Picture Set for Growt
The macroeconomic market environment that geospatial
firms will encounter in 2006 looks favorable indeed. Expect
and international military expenditures on geospatial products and
services to grow in response to continued geopolitical conditions and
increased reliance on commercial imagery. Governments around the world are
becoming accustomed to budget line items related to imagery and mapping.
The outlook for world economic growth is healthy through 2006 and into
2007, with world Gross Domestic Product rising between 3 percent and 4
percent in 2006 despite high energy prices and ongoing weakness in the
Euro zone. Because governments collect a lot of taxes on marginal
earnings, the major customers of the geospatial industry will show robust
demand. This is especially true for domestic state and local governments,
which will remain in a bullish acquisition and expenditure cycle.
Remote Sensing Seeing Straight
The remote sensing industry will enter 2006
right-sized, with two major
owner-operators. As ORBIMAGE swallows Space Imaging’s assets, it will
compete with only DigitalGlobe in the high-resolution commercial remote
sensing market. Given the symmetries between ORBIMAGE and DigitalGlobe,
expect an interesting skirmish for market position. Both firms have
first-generation imaging satellites in orbit; both have NextView contracts
with the National Geospatial-Intelligence Agency (NGA) to finance and
construct their next-generation birds; and both will see dramatic
increases in sales revenue after launching these highly capable systems.
Customers and applications developers alike can now build reliable
partnerships for a long-term supply of imagery source materials. With the
NGA’s retired Air Force Lt. Gen. James R. Clapper Jr. playing the role
of industry anchor tenant, the firm’s income statements will facilitate
the financing of an ongoing constellation of remote sensing satellites,
and provide solid returns to investors.
Spatial search is beginning to drive demand for
imagery and geospatial data. The much-ballyhooed investments by Google,
Microsoft, Yahoo and even Amazon in imagery are indeed a portent of good
things to come. 2006 promises to bring scads of new applications and users
to the geospatial doorstep. And no one even knows what the killer apps
will be in the search market yet (although there are some good hunches).
Although at times it may eerily feel like the
Internet euphoria of early 2001, this time the players have a much more
sober view of the prospects and uptake rates in the mass market. And the
search providers have established eyeballs, business models, revenue
streams, and gobs and gobs of beautiful cash on their balance sheets.
Counting cash and near-cash assets at the end of 2005’s third quarter,
here is the litany:
$40 billion (!), GOOG $7.5 billion,
$3 billion and
$1.4 billion. Cash, oh lovely cash, come to Papa over here in the remote
sensing industry! One might surmise that aerial and satellite imagery
coverages that are both comprehensive and recent are now at a premium.
: They Stopped Making It
Some markets develop ever so slowly, then they reach
a tipping point and the sector hits maturity in just a few years. This
seems to describe the market for land information at the ownership level.
It is a basket of related sub-markets, including cadastral and land
registry systems, titling, parcel mapping, and information related to
property insurance, mortgages, deeds, real estate transactions and
taxation. The customer space spans federal, state and local governments,
Fortune 500 firms, and financial institutions all the way down to brokers,
individual investors and property owners. If you want to have a seat in
the land information industry, you should get into the game quick, before
the music stops.
Even the monolithic multilateral aid and financial
institutions that support international development are getting the
picture. They now understand that individual property ownership is a
precondition for widespread formation of capital in fledgling market
economies. The value stored in homes that owners take for granted is but a
dream for the majority of the world’s population. Though a Guatemalan
farmer may have assumptive ownership and uncontested use of his land,
it’s entirely another matter to buy or sell the land or borrow against
it. A lot of government infrastructure must be in place to securitize
land—to make it fungible—so a mortgage can be issued and its rights
enforced. Base and parcel maps, cadastres, property titling and land
registry systems, and institutions and legal frameworks are a necessity.
It is now widely understood that land reform and economies with broad
participation have the precursory requirement of land information
infrastructure. The high-dollar funded international projects in this
sector are mounting, and
firms are under-represented in their pursuit.
Yes, the business outlook for Earth imaging and
geospatial information is highly favorable in 2006, with economic risk
scenarios at low likelihood through 2007. Now is the time for industry
leaders to take action—merge, acquire, invest, build and grow. This is
as good as it gets.