March 11, 2009
Ed. note: This
article originally appeared in the March 2009
issue of Open Source Business Resource. The article is licensed under a Creative Commons license.
"Man is a microcosm, or a little world, because he is an extract
from all the stars and planets of the whole firmament, from the earth
and the elements; and so he is their quintessence." Philipus
Aureolus Paracelsus
Open source has seen great success in general information processing,
but does it have a future in vertical markets? In this article, we
examine how geospatial open source provides an example of the market
challenges of a mid-sized vertical market.
Open Source and Decision Makers
General purpose open source software (OSS) has been on the radar of
decision makers for almost a decade. Big projects like Linux, Apache,
Firefox and Open Office are supported by Fortune 500 companies like IBM
and Sun. Everyone knows about open source, it is in their plans, books
have been written. In general information technology (IT), there is
little more to say about open source.
However, the IT world does not end at databases, operating systems, and
office automation. IT is like a fractal form, each major facet can be
subdivided and re-subdivided down into particular shapes that fit the
needs of unique markets.
The economy is full of niche markets with very particular information
processing requirements. Examples of niche markets can be found in
health care, education, natural resources, manufacturing, and
telephony. Each of these fields makes use of the generic open source
building blocks that have already swept through IT. They also have
their own distinct ecosystems of dominant proprietary vendors and de
facto standards that shape decision making and software acquisition.
Open source is growing in these niche markets, but much more slowly
than in general purpose IT. The reasons are pretty straightforward:
smaller markets mean fewer users, fewer developers, and fewer resources
for open source.
History of Geospatial Markets
Geospatial is one of the niche fields that is being slowly colonized by
open source. Geospatial software is used by natural resource managers,
cartographers, fleet managers, and anyone with a location component in
their data.
Geospatial is a recent term for what has traditionally been known as
"geographic information systems", or GIS. The original users of GIS
software were government environmental scientists and land managers. As
early as the mid-1960s, governments were building their own GIS
systems, writing the code in-house.
In the 1980s, as computing hardware became cheaper and more
interoperable, the economics of GIS shifted. Rather than buying
computers and writing GIS systems from scratch, governments bought
computers and then bought GIS software. An ecosystem of proprietary GIS
vendors emerged quickly. Some vendors were regionally based, others
were specialized in particular fields like forestry or oil and gas.
Some of the last in-house systems were written by the government. The
Geographic Resources Analysis Support System (GRASS) was written by the
US Army Corps of Engineers after an evaluation process that determined
none of the current proprietary systems met their needs. The Map
Overlay and Statistical System (MOSS) was written by US Fish and
Wildlife Service, after a similar market evaluation.
Both GRASS and MOSS were released as public domain works, effectively
becoming the earliest examples of open source geospatial software.
GRASS was re-licensed as a GPL project in the mid-1990s. However,
throughout the 1990s, the OSS largely languished in academia while
proprietary software filled the entire government and corporate
ecosystem for workstation-based GIS.
Just as the computer and operating system market consolidated to Intel
and Microsoft through the 1980s, the GIS market consolidated through
the 1990s. The GIS market consolidation battle in North America and,
increasingly, the rest of the world, was won by a proprietary vendor,
ESRI, which started out from a market base in the US federal government
and gradually displaced other competitors in the North American market.
By 2000, ESRI had achieved a geospatial market position similar to that
of Oracle or Microsoft in the general IT marketplace. They were the
default vendor and the only safe choice for decision makers.
Like Microsoft and Oracle, ESRI's market dominance was built on a
narrow but important product category. Microsoft dominated operating
systems and office automation. Oracle dominated relational databases.
ESRI's dominant category was, and still is, desktop GIS software.
Desktop GIS software provides users with the capability to create,
edit, analyze, and cartographically print geospatial data.
Market Disruption
The rise of the Internet was famously disruptive to the Microsoft
business model. In 1995, Bill Gates radically revised the company's
software strategy to focus on networked communication. The new strategy
was intended to pre-empt new competitors arising who could take
advantage of the Internet software arena. On the desktop side,
Microsoft was successful, Netscape was crushed, and RealNetworks is
mostly gone.
In geospatial, ESRI suffered a similar disruption from the Internet. As
their users got used to accessing non-spatial data over the Internet,
they began to ask an obvious question: "how can we provide access to
our geospatial data over the Internet?".
The immediate question didn't involve analysis, cartographic printing,
or data capture, all of which are ESRI's core desktop strengths. The
immediate request was for simple data access. Like Oracle, ESRI made
some early strategic errors in providing Internet-enabled versions of
their software. Their pricing model locked smaller organizations out as
the cost of entry was too high. However, rather than throwing up their
hands and not providing Internet services, smaller organizations and
individuals simply looked for alternatives. In the case of Oracle, they
found MySQL and PostgreSQL. In the case of ESRI, they found MapServer.
Arguably, the price points that individuals and small organizations
wanted couldn't be rationally provided by ESRI or Oracle. But, by
driving individuals and smaller organizations away, the dominant
vendors seeded a new marketplace that quickly developed alternative
open source product suites.
Dynamics of Open Source Geospatial
In 2000, the market for "web map servers" was brand new. The high cost
and poor performance of the offerings from ESRI slowed adoption. The
low technical bar to entry needed to "display maps on the Internet"
allowed a new entrant to gain traction. MapServer was originally
developed in an academic setting, the University of Minnesota, using
grant money. Released as open source in 2000, it had just enough
existing functionality to begin attracting new developers.
Once MapServer began providing useful services to users, it started to
attract more open source development. Unlike the "pay to play" model of
proprietary products, the open source MapServer allowed organizations
to get their feet wet with existing capabilities for free, then pay to
add new capabilities if and when they needed them. Organizations that
adopted MapServer for free began using funds to add improvements around
the margins.
Among the features that were added by the MapServer user community were
the ability to read data from additional GIS file formats and from
satellite imagery, and support for international interoperability
standards. The improvements, and particularly the standards support,
served to make MapServer useful to a larger audience, which drove
market growth even more.
The characteristics of the adopters of open source geospatial are
familiar to any student of open source market dynamics. Open source
tools are generally evangelized by technical staff, who have the
ability to acquire and test the tools themselves. This effectively
limits early adoption to startups and larger organizations with pockets
of progressive technical expertise. Conservative organizations tend to
gather intelligence through vendors and trade magazines, which serve
mainly to reinforce existing purchasing patterns. Organizations that
have already chosen a proprietary product for a functional category
will rarely switch to an open source equivalent until the proprietary
product hits end-of-life.
The exceptions to this rule have been open source phenomenons, like
Linux or Firefox, which have received publicity outside the technical
trade press. The publicity around Linux has forced even conservative
organizations to make some formal consideration of using general open
source.
Open source geospatial is a small niche and its software will never
receive the popular press coverage of the sort that has made Linux and
Firefox well-known. Most existing geospatial software customers, such
as governments and resource industries, remain comfortably within the
arms of the dominant proprietary vendor, ESRI.
The market area where open source geospatial has been most quickly
taken up is among organizations in which there is no existing bias
towards the dominant proprietary vendor. These are usually companies or
agencies making their first foray into Internet mapping, motivated by
the geospatial renaissance triggered by the introduction of Google
Earth and Google Maps. Their technical staff research the options and
find that they can get what they want from open source. The available
open source includes:
- the PostGIS geospatial database
- GeoServer to provide web map services and web feature services
- the GDAL programming library
- the Geotools Java GIS toolkit
- the SharpMap geospatial application framework
- the web interfaces provided by OpenLayers
Examples of new Internet companies using open source geospatial include:
- Redfin, a real-estate information company
- GeoCommons, a data sharing community
- Zonar, a fleet management and vehicle tracking company
- GlobeXplorer, a satellite imagery re-seller
- Urban Spoon, a restaurant review site
- Whereyougonnabe, a spatial add-on for Facebook
The other area where open source geospatial has been taken up is in technically savvy pockets of large organizations. Like the Internet companies, these organizations have enough of a user-side demand that deploying proprietary Internet service software creates a large financial burden. Unlike startup companies, large organizations can potentially afford to pay for the proprietary software.
In some large, conservative organizations, visionary managers adopt and deploy open source. However, there is nothing systematic about the adoption, it is a consequence of the personality and personal interests of the manager. If he or she leaves the company, the open source pocket may disappear. Because the progress of open source geospatial in these organizations is so personality-based, it tends to be rare and to run in fits and starts.
Open Source Geospatial Challenges
The progress of open source geospatial on the desktop has been very slow. Desktop geospatial software already has an entrenched proprietary incumbent, ESRI's ArcGIS, with a long history. The amount of quality code required to reach feature-parity with the incumbent is very high as ESRI has been working on their desktop software for decades. Simple desktop implementations are available with QGIS, uDig, and gvSIG, but are mostly consigned to the niche of extremely low budget organizations. As a result, financial resources are not available to speed up development, and the pace of progress remains slow. The exception has been gvSIG, which is heavily funded by Spanish government organizations, but it is still mostly a niche development used in Spain.
In all cases, the growth of open source geospatial has been slowed by matters of scale. Open source products generate much smaller revenue streams from user populations than proprietary products. In large markets with well-capitalized customers, companies can make good money even on the smaller revenue flow of open source.
However, in a small vertical market, it is difficult for companies to get a foothold. A customer will usually deploy several open source geospatial products to create a solution, so a support provider has to have extensive in-house experience to support the whole solution. In a traditional model, start-up costs would be capitalized by a venture funder, but the size of the geospatial market-place makes the 10:1 returns required by venture capital unlikely.
OpenGeo is breaking the geospatial support log-jam by building a social enterprise using philanthropic funding to bootstrap an organization that contains the breadth of expertise necessary to support a variety of open source geospatial applications. OpenGeo's motivation is not to maximize profit, but to maximize social good, while covering costs. This allows the organization to build a sustainable market while surviving on the smaller revenue streams available in the open source geospatial arena. The products OpenGeo supports such as Geoserver, OpenLayers, PostGIS, and GeoExt, make a top-to-bottom deployment stack for geospatial applications.
Lessons for Other Markets
Open source geospatial holds a number of lessons for other vertical markets. First, frontal assaults on the leading proprietary vendor are unlikely to succeed. In their core areas, the leading vendor has an advantage in technology development and existing mind-share. Usually, building enough technology to compete with a leading vendor head-to-head takes years of development, and a partially functional product will be ignored.
Second, disruptive changes in technology provide opportunities for open source. Most leading vendors carved out their advantage on the desktop during the 1980s and 1990s. The transition to web-based services has opened a temporary gap in the marketplace where existing vendors have a smaller technology advantage, and their marketing advantage is limited to their existing universe of customers. Open source can become the core for new service-based companies competing with proprietary software vendors.
Finally, new markets for capabilities are the most fertile opportunity of all. In geospatial, its expansion into daily life, through vehicle and device tracking, low cost aerial imaging, and handheld mapping, is growing the market exponentially. New developers and managers, without long-held preconceptions, are making technology choices. On a level playing field, open source Internet technologies are regularly winning.
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