A Season of Change

November 3, 1998

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Change is in the air in the data business. Partners are becoming competitors, competitors are merging with each other, and new players are appearing in the increasingly intertwined fields of mapping software and demographic data products.

These changes will affect what software and data you buy, who you buy them from, and how you use them – and most probably the amount of money you spend! A brief glimpse at the past two months' activity in the mapping industry conjures up one word: Change

On September 1, Geographic Data Technology (GDT), bought BLR Data, and thus removed its only competitor for the sale of street databases in the high-end commercial market. They also acquired Wessex on the same date. GDT now has products which dominate both ends of the mapping market, from high-end products such as their Dynamap 2000 to low-end desktop data such as Wessex' Streets 4.0.

Just as the autumn leaves began to turn in early October, Detroit-based powerhouse The Polk Company entered the US cluster segmentation market for the first time in an agreement to create and supply the data in MapInfo’s TargetPro product.

At the same time, MapInfo published its two-page “Divorce” advertisement, urging customers of its (apparently!) former ally and data partner, Claritas Corporation, to "divorce" themselves from Claritas.

Environmental Systems Research Institute (ESRI), which dominates the business mapping markeplace along with MapInfo, is as we go to press choosing who it will name as data supplier for its Business Analyst product. That decision will be an important indicator of further movement in the industry.

Streets Data Marketplace

This is a lot of action in one marketplace. How did we get here, and what does it mean for you? The best way to answer that question is to recall similar changes that occurred in the demographic data vendor industry more than a decade ago.

During the 1980s, Urban Data Systems (UDS) and CACI were leaders in the demographic data vendor market. And they had plenty of competition in vendors such as National Decision Systems (NDS), National Planning Data Corp. (NPDC), Claritas and Donnelley Marketing Information Services (DMIS). Geographic Data Technology (GDT) was alone in supplying street data.

MapInfo was allied with Claritas, which supplied the mapping company's demographic data. And MapInfo software was embedded in those Claritas products, such as Compass, which included mapping functionality.

Then, the mergers and acquisitions began, while new companies joined the fray:

Wessex began publishing US Street and demographic data in 1992. Its business model, selling lots of data to many customers, challenged the industry price structure.

Strategic Mapping (SMI) bought Donnelley Marketing Information Services in 1993. DMIS data and services (ring studies and other custom reports) were absorbed as part of the Atlas product line at SMI.

In 1994 BLR Data (BLR) began a major effort to develop a high-end street product (which came to be called StreetNetwork) to compete with GDT, at GDT's price point. The product, StreetNetwork, was first released in 1995.

In 1995, Claritas swallowed the data components of Strategic Mapping. (As a byproduct of this acquisition, ESRI acquired the rights to SMI's Atlas mapping package. ESRI continues to market and develop this product). SMI's "over the counter" reports capabilities had earlier been spun off to Information Decision Systems.

More changes occurred in 1997, when VNU USA, the US subsidiary of the Dutch data giant VNU, bought National Decision Systems, which had been renamed "Equifax/NDS" after it was taken over by the credit reporting firm Equifax. VNU is also Claritas' corporate parent.

Earlier in 1997, NDS had acquired Urban Decision Systems. And at the end of the year, BLR acquired Wessex

What’s next?

In purchasing BLR's product line, it seems clear that GDT was mainly acting to counter the price erosion that has been recently prevalent in this market. This is corroborated by the fact that BLR's products are being discontinued by GDT. GDT will likely be successful in this regard; for most of the projects for which its street products are being bought, the cost of the overall project dwarfs the expenditure on the street data.

More interesting for the business mapping community will be the fate of Wessex. GDT has made several public pronouncements that the Wessex product line will be maintained, and will continue to be updated. There are good reasons to think this will be the case.

First, the eight month marriage of BLR and Wessex proved that low-price and high-price street products could successfully coexist, and be sold with minimum cannibalization inside the same organization. TIGER-based products are fundamentally appropriate for a different set of end-users than are enhanced data sets. With an independent Wessex division, GDT will have an additional set of products to offer to new kinds of customers. This will be especially true for university and government customers, who have been a mainstay of Wessex but nearly absent from the roster of GDT clients.

Demographic Data Marketplace

This is how the marketplace looks to us now. Claritas, the VNU standard bearer, is clearly dominant here. It faces two sorts of challenges. On one side are two veteran, large companies and two newer, smaller, and perhaps nimbler ones.

In the past year, under the leadership of Eric Cohen, CACI has been more aggressive in its advertising and in exploring the use of the Web. And in August of this year CACI bought IDS, which specializes in web delivery of low-cost demographic reports.

British-based Experian is certainly large enough to challenge Claritas/VNU in terms of financial and technical resources. But they do not seem at present to be paying much attention to the US marketplace. Their recent acquisition of list giant Metromail may be part of the reason for this, and it is always possible that they will refocus the effort they launched in 1996 to penetrate the US demographics market.

Applied Geographic Solutions, led by Compusearch and UDS veteran Gary Menger, has made significant inroads for a company of its size. Easy Analytic Software is another company led by an industry veteran (Bob Katz); they are also new and relatively small.

Claritas' other principal challenger may be the combination of The Polk Company and its Canadian subsidiary Compusearch. Compusearch, heretofore exclusively focused on products about the Canadian population, is well-suited for the challenge. They have an excellent team of demographers, headed by Dr. Tony Lea. And as a division of Polk they have the marketing resources to launch and sustain such an effort.

The future of the MapInfo / Claritas relationship is also of interest. Will Claritas leverage the learning that its partner NDS has gained with ESRI tools (SDE and MapObjects) to remove the MapInfo technology in their products?

ESRI, who together with MapInfo dominate the business mapping marketplace, is as we go to press deciding who it will name as the new data supplier for its Business Analyst product. That decision will be an important indicator of further movement in the industry. ESRI may well choose one of the smaller players, at least partly in an effort to increase the competition in this field.

Is all this activity a good thing or a bad thing? We're interviewing the players right now, and will present their views, and ours, in the coming days. In the meantime, join the discussion and let us hear what you think!


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