The geospatial industry has been moving towards consolidation from a business perspective and there are a lot of industry partnerships forming. I also see a lot of partnerships with respect to small to medium size businesses with other businesses. There are also a lot of new start-up businesses formulating, which are not only challenging the status quo players in the industry but also looking to formulate partnerships. So there is a lot of positive activity within the industry at large.
Today, you don’t have to be a geospatial company to be in the location business. In the last few years we have seen a lot of non-geospatial players entering the market. This is because they are all interested in location and location intelligence. And that is good both for those of us in the geospatial industry and for those who are not, because we all have one thing in common and that is location.
Why location is so important
If you look at the various questions we have surrounding our Earth, location provides the underlying footprint and fabric upon which we can make smart decisions. If you don’t know where you are, you can’t make decisions about taking action on a given situation. So, location is really the lowest common denominator of providing a framework upon which decisions about our Earth could be made. And, once again, you don’t have to be a geospatial company to know that. I think it is just common to everything we do in our world, whether you are in Facebook, or Amazon, or Google, or driving down or targeting a customer… location is everywhere. And if you don’t have some facet of your business tied to location, you won’t be in business at all. And that is just reality.
The rise of social media and Internet led to this interest in location from the consumer’s side, which is reflecting in a lot of mainstream geospatial players too showing interest in the consumer side of the business. If you look at the advancements made by IT giants like Google and Microsoft, they kind of went full throttle and entered the location market. They went from a consumer location market to a professional market. Now these companies are scaling back from the professional market to their core focus, which is socialization and democratization of geospatial technology, to the consumer market. This, I think, is absolutely great and needed.
So, you have different tiers of what is required to be supportive of the geospatial initiatives. You have the consumer tier, the professional tier, and then you have something in the middle — what we sometimes call the ‘prosumer’ market — which is sort of dabbling in some high and professional requirements but also requiring some basic fundamental mapping capabilities that you can get from the likes of Google, Microsoft, and others.
“Today, you don’t have to be a geospatial company to be in the location business. In the last few years, we have seen a lot of non-geospatial players entering the market. This is because they are all interested in location and location intelligence”
I feel the market is big enough to have these three tiers. That just shows that there is a lot of diversity in the various requirements needed in various industries that have a requirement to use geospatial technologies.
New disruptive business models
One of the things we are seeing in the market is a sort of transition from a desktop perspective, from perpetual licenses to perhaps subscription licenses or pay-as-you-go licenses. That is new. Last year in Hong Kong we announced this Smart M.App initiative, which is a new platform for building light-weight, purpose-built geo apps. Our business model here is very simple: we provide you a platform for building these apps; the partner or the customer who builds it gets 70% of the revenue and Hexagon retains 30% of the end-user revenue. This, according to me, is a very different model to the traditional business approach of doing business. With that model we also give a percentage of revenue to any content partner that is feeding content in that application or into that solution.
There is a new business model from the content generation perspective too. Content providers have sensors that collect the content, and then they have some revenue share model for any upsells or any revenue in the rear that is realized as a result of the sale of content downstream. We have seen an idea of renting sensors or providing sensors in return for some revenue-share model for that content when it is sold downstream.
In the future we will see some more change as we move from a traditional desktop market to pay-as you-go or pay-as-you-use market.