While the United States government stands at a crossroads in an attempt to determine the amount of financial support it is willing and able to invest in EnhancedView—its domestic commercial remote sensing (CRS) program—the international CRS community is blazing a path into the marketplace of tomorrow. Companies and countries across the globe are forging new business relationships and strategic partnerships that have industry experts in agreement: A whole new level of intense global competition is just beginning.
“I like to call it ‘coopetition,'” said Joerg Herrmann, senior manager at Astrium GmbH, Germany. “It’s like in sports—sometimes you play on the same team, sometimes you play on different teams.”
In this new marketplace, opportunity abounds. Former competitors are creating alliances and working together to create new solutions and carve out bigger slices of the growing commercial data market pie—the value of which is expected to grow from $1.3 billion in 2010 to $4 billion in 2020, according to Adam Keith, director of earth observation at Euroconsult, an international consulting and analyst firm specializing in satellite applications.
What impact would cuts to U.S. commercial imagery programs have on this bright future? It depends how deep the cuts are, but the equation still raises concern. Increasing international competition, minus domestic investment, equals a weakened position for U.S. companies. The bottom line: U.S. leadership in the global CRS industry is at risk.
No. 1 in Europe
In the last five years, the five leading commercial satellite companies, including DigitalGlobe and GeoEye, have signed more than 250 distribution agreements with service channels, companies, and organizations globally, Keith said. The ability to diversify internationally has been a key element for the strategic advancements of these companies.
“Astrium GEO-Information Services is the No. 1 competition out there today for both DigitalGlobe and GeoEye,” said Dennis Jones, president of The Jones Consulting Group. “They have the largest constellation of satellites, both electro-optical and radar, they have a global ground infrastructure, they have global channels which they sell into, and they have global partners.”
Astrium GEO-Information Services, a subsidiary of EADS, is headquartered in Toulouse, France, but has offices around the globe, including Europe, North and South America, Asia, and Australia.
With the recent launch of Pléiades-1 in December 2011, Astrium now offers 50-centimeter resolution with a 20-kilometer swath. Once its twin, Pléiades-2, is launched later this year, it will be phased 180 degrees from Pléiades-1, providing the capability to revisit any point on the globe daily.
“I think all three companies, especially since Pléiades has been launched, are directly competing,” Keith said.
“There is a tendency to think that everything the U.S. does or has done with satellite technology, other people have simply just copied,” said Bob Weber, senior research analyst with Innovative Analytics & Training and former director of international affairs and policy at the National Geospatial-Intelligence Agency (NGA).
“In Europe, in Japan, in South Korea, in Israel—modern space-faring nations have been doing this stuff in their own way for a long time.”
When you look at the international landscape and how certain things have evolved, you cannot underestimate the importance of national sovereignty as a driver, Weber said.
This past November, in an address to the French space agency, CNES, on its 50th anniversary, former French President Nicolas Sarkozy said, “Space is a high priority for us because there is no French sovereignty if we ignore what is at stake in space. It would be crazy not to give this industry the resources it needs to develop.”
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Driven by Demand
The intelligence requirements of international defense agencies will be one of the strongest growth drivers in the coming years, according to a recent Euroconsult report.
“There are very few countries out there that have the autonomous image collection capabilities to respond to their image intelligence requirements,” Keith said. “Nearly every country has a defense agency, and if they have a defense agency, then they require data. So the potential to sell data internationally for defense image intelligence is massive.”
In 2011, there were 35 satellites, optical and radar, offering commercial data solutions, said Keith. By 2017, he predicts there will be 60. As more and more competitors enter the commercial high-resolution data market, the cost of these satellites—to manufacture, to launch, and to operate—becomes a significant factor in determining future success and return on investment. The top-of-the-line systems from DigitalGlobe and GeoEye, and now Astrium with the Pléiades, are like the Ferraris of the industry, Keith said. “Very high-end, very high-accuracy, very high-resolution,” he added.
But not all applications require that level of horsepower, and some commercial data consumers are simply looking for an option that is good enough, if not the cheapest. Why pay for a Ferrari if a Subaru will do?
In Japan, the NEC corporation is developing an advanced satellite with new system architecture for observation (ASNARO), which aims to supply the needs of future overseas markets with a small, high-performance, low-priced satellite, according to the technical abstract on the company’s website.
“I think the breakout point of this industry comes when you knock the cost of the spacecraft down below $100 million,” Weber said. “When you’re in the tens of millions, you’re starting to talk about some real change that’s fundamental.”
Reports differ on the development cost for ASNARO-1, from $30 million initially to $70 million more recently. According to Euroconsult, the two Pléiades satellites, including launches, are expected to cost a total of $1 billion.
Is There an App for That?
The next giant leap in the geospatial industry’s evolution may not be skyward.
“Forget about the satellites for now,” Weber said. “I’m not kidding. Let’s at least spend as much time, if not more, shaping the future path of this country with what we do on the ground as what we put into the sky.”
He added that industry has been talking about developing a “killer app” since the ’80s, yet no such application has arisen thus far. “You never know, location-based intelligence might be one of these things,” Weber said.
Marcello Maranesi, CEO of Italy-based e-GEOS, said the industry needs to do a better job of understanding the real value of products, services, and applications for the end user.
“The basic equation is that value should be greater than cost. Many times people in the Earth-observation sector forget about this equation,” Maranesi said. “Today, if I look from a user point of view, there is still a lot of demand which is not satisfied by the technology available and also because the price is not the right one.”
He continues, “We need to escape from customized acquisitions; we need to escape from customized products; we need to go to industrialized, fully engineered operational services, sold many times to different customers who will share the price of service. This will enlarge the volume of the business and the marketplaces.”
“With this competitive situation, there is certainly a trend in terms of price pressure which will make capabilities more affordable,” Herrmann said. “And to some extent that may lead to industry consolidation. We are doing our best to survive and even grow in an increasingly competitive marketplace.”
Herb Satterlee, CEO of MDA Information Services, said that since Google Earth and Microsoft have made high-resolution satellite imagery easily available to the average person, the perspective on the planet has literally changed. There is a lot more recognition by the casual user that commercial imagery is interesting and important, he said.
“The commercial markets haven’t grown as fast as the government markets for the big data providers,” Satterlee said. “But I think there is a tremendous amount of growth remaining there. I don’t think the U.S. government, in anybody’s view, is going to abandon DigitalGlobe or GeoEye.”
Keith describes the entire industry as very government-oriented.
“Whether in the funding of the systems or as a customer, the government is a big necessity,” he said. “Without the government, it is still very difficult for commercial operators to exist. However, the reality is that GeoEye and DigitalGlobe existed before the large U.S. contracts; they’re going to exist afterward.”
More companies and stronger competition in the global commercial remote sensing community will benefit many, as competition incentivizes innovation and drives down costs.
Featured image: COSMO-SkyMed Multitemporal image, El Oued, Algeria. (Image credit e-GEOS)