What should the satellite companies DigitalGlobe and GeoEye do now that ongoing talks of mergers and acquisitions are a well-publicized fact? It’s a pretty fair bet that something has to happen soon since it looks increasingly like the government will cut spending for commercial remote sensing satellites. Editor in Chief Joe Francica writes an open letter to the CEOs of both companies with some "free" advice.
It seems you’ve been talking about a merger or acquisition or something of that nature. I suspect the whole EnhancedView contract from the NGA has gotten everyone a little nervous, especially the stockholders. I’ve got some free advice if you are willing to listen (of course, we all know that it’s worth about the price you pay), but hear me out.
The government wants to cut off your lifeline and that’s caused you to re-evaluate your business model. I say it’s a good thing and here’s why. You need to start thinking like businessmen instead of acting like another government agency. The good times are about to come to an end and you’ve only half-heartedly attempted to address the needs of commercial clients in the past. Guess what? It’s time to ask that very hard question about what you want to be when you grow up.
You see, the railroads never asked that tough question and they missed the opportunity to be the world’s leaders in transportation. Now, there are more than a few aluminum tubes flying around the world and CSX, Union Pacific, et. al. are still hugging the ground. Actually, those guys are in the real estate business; they just happen to have a few diesel engines pulling box cars, as well. UPS figured this out, too. It says it is a “technology company” that just happens to drive trucks (See Geospatial Revolution Part 2). But I digress.
Are you just providers of satellite imagery or are you providers of information? This is, after all, the "information age," not the "pixel age." Imagery is becoming a wonderful commodity, which you helped to foment by selling your basic imagery to Google. With the prospect of new FAA regulations mandated for unmanned aerial system (UAS) operation, not to mention the thousands of UASs coming home from war, you can bet government agencies and private companies will quickly move to fly these birds for mapping applications. Real-time, persistent surveillance is on the horizon. LiDAR is getting cheaper. Whether you or some other more entrepreneurial soul looks to launch geostationary birds that can react to “breaking news” or other commercial applications, the world craves more of the information that you now have.
I always thought you would be acquired years ago by someone like Google or Microsoft. Google wants to "organize the world’s information." You’ve got a fair chunk of the raw data; it’s just not usable in a form that means much to people yet. Most people don’t know how to process 8-band image data into something that looks like usable information. It’s seems Google wants to try to organize data (see Google Earth Builder and Earth Enterprise) but I don’t know if it’s up to the task. It will take someone with a little better understanding of what the public wants to buy. That’s where you guys should come in. You need to help the world better understand the applications; sell them knowledge, not pixels. You’ve got a “big data” problem in the purest sense of the word.
Whether you stay as two companies or merge, you must rapidly adjust to bringing an information product to market that the commercial clients will clamor to buy. I suspect you feel a little like the LBS market of ten years ago. The portable navigation device marketplace begot foursquare. Mobile location services started off pretty basic and years later someone created a cool app that used location technology in social networking. You’ll need to do something similar. You also have a similar challenge to NAVTEQ and Tele Atlas. They were acquired by Nokia and TomTom respectively, companies that were in the mobile space. NAVTEQ and Tele Atlas were in the data business, too. Prior to acquisition, they were investing in acquiring "street furniture" (street signs, lampposts, etc.) to augment their databases. These other forms of data helped each company to deliver useable information beyond standard street centerlines. They went beyond selling their “bread and butter” products to respond to the anticipated needs of the market.
You have a tough job, to be sure. Not many people understand spectroradiometric data or the applications thereof. And not many people know the usage for products with differing spatial resolutions. You have not sufficiently explained what half-meter spatial resolution buys you versus 1-meter or 3-meter. Both spectral and spatial resolution are so nebulous and hard for your broader market to understand from a technology standpoint.
You also have a marketing and image problem. You’ll have to take a leaf out of Colonel Sander’s book and find a way to turn "dead chicken parts" into "finger linkin' good food." No matter how many pretty pictures you put into your image galleries, it still looks like you’re selling “cold wings.” The images aren’t products, they are just pictures. Interpretation, integration with other data, analysis and finally, information is what is needed. You’re still missing a few pieces.
So, here’s my advice. Get together, merge, whatever. Then go after Nokia and convince it to spinoff its Location & Commerce data business division. It is probably looking for a little cash at this time, given its most recent quarterly report. Then I’d recommend getting into the UAS business. You missed the opportunity to buy Gatewing so you’ll need to become a bit more nimble and watch for the next opportunity. Satellites are great technology but UASs will be cheaper to maintain. Once you’ve acquired the necessary location-based data assets you can begin to become the world’s geospatial information provider. It’s what you both really wanted to be all along.