In September, Kevin Resch and I released a study through the Center for Strategic Space Studies (CS3) regarding the future of commercial geospatial intelligence (GEOINT). The study assessed exciting advances in technologies, applications, products and services, largely occurring outside of U.S. government efforts. The report suggested that these changes are powerfully reshaping the GEOINT world and, if appropriately leveraged, could significantly aid the National Geospatial-Intelligence Agency (NGA) in achieving its mission. The purpose of the study was to help the U.S. government and U.S. commercial imagery companies to identify, understand and anticipate such changes to better harness the power of future commercial GEOINT solutions.
Today two companies comprise the majority of commercial GEOINT services for the U.S. government: and . Perhaps not surprisingly, given the looming reductions to defense and intelligence spending, congressional committees and components of the executive branch are intensely scrutinizing NGA’s commercial imagery budget and raising questions about the value of its contribution to national security. This scrutiny, the changes described in the CS3 report, and the implementation of bold new vision by NGA Director Letitia Long to transform the agency’s mission approach, have forced the U.S. government and industry to reassess the future of commercial GEOINT services.
The results of the reassessment will likely transform the way the U.S. government leverages commercial GEOINT products and services. But more importantly, it will forever alter the competitive landscape and business market in which commercial GEOINT companies will be expected to execute and survive. If the current U.S. commercial data providers are to remain viable in this new environment, they must proactively take several steps to ensure future relevance and success.
First, they must become GEOINT services and solutions providers rather than solely imagery or data providers. GEOINT users seek accurate and timely answers to their questions about activity and environment at a given location. They generally do not care if the information comes from a satellite, an airplane, the Internet or another GEOINT user. Simply taking pictures from satellites and selling images will not suffice in the future. To remain relevant, these companies must incorporate a wide array of additional data sources, assemble and integrate the data, and perform value-added analysis that transforms it into information and knowledge.
Second, the commercial data providers should expand their limited focus on revenue generation outside the U.S. government national security market. Two key reasons demand this: First, one can expect significant downward pressure on the overall national security budget and by connection NGA’s commercial imagery budget, and second, the most innovative development of GEOINT tools and applications, as well as potential for demand growth, is occurring in the commercial sector. Developing and leveraging commercial solutions will provide a more stable revenue base as NGA finalizes and implements a new approach to commercial GEOINT. At the same time, it will foster the development of promising crossover technical advancements and solutions that could establish future offerings to the national security market.
Third, the commercial data providers should adopt an aggressive approach to merger and acquisition activities, targeting the types of innovative and agile companies described in the CS3 study, to allow them to leverage fast-paced commercial developments. Moreover, taking a note from Sirius and XM Radio in understanding the true scope and nature of their market, DigitalGlobe and GeoEye should consider merging to create one company. Consolidating their companies would reduce duplicative infrastructure, while pooling their innovative human talent would enable a merged company to effectively compete against other knowledge-providing companies (their true future competition). Catalyzing this, we anticipate budget cuts will soon cause NGA to pick a winner and eliminate parity in the commercial GEOINT market. This will likely be through rewarding innovations in value-added products and services. The commercial data providers should be prepared.
A common misconception about evolution theory is that only the strongest survive. In reality, the theory suggests that survival comes to those who best adapt to change, not necessarily the strongest. The commercial GEOINT market is undergoing tremendous change and therefore today’s U.S. commercial imagery companies must adapt; they must take immediate action to remain viable. Necessary actions will not present easy choices or yield immediate gratification. Yet their aggressive implementation will help determine whether today’s imagery companies survive and thrive or become footnotes in history.
Joshua Hartman is a principal at the Center for Strategic Space Studies and the chief executive of the Horizon Strategies Group. The study referenced above can be found at www.CS3Online.org.