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Daratech study points to public sector surpassing regulated sector on geospatial software spending

Massachusetts, USA, 14 August 2006: Daratech, a provider of information technology market research and technology assessment, has provided estimates which indicates that public sector spending on GIS/Geospatial software will surpass the regulated sector for the first time in 2006. The sectors are close, with public projected to have a 39% share of all GIS/Geospatial software spending by year-end as compared to 38% for the regulated sector. The growth in the public sector averaged 15% per year for 2004 – 2006, while the regulated sector averaged 7% for the same time frame.

Growth is seen worldwide. For example, in the United States, the public sector interest is fueled by homeland security and the U.S. Federal government-sponsored Landfire and E-government projects.

European federal governments today are significantly more interested in GIS/Geospatial technologies than in the past. Several vendors note that since many of these customers started later and are more accustomed to desktop technology, they have been quicker to zero in on what they want instead of building complications into their procurements. Throughout the past decade, a number of vendors have also targeted opportunities in Eastern Europe connected with infrastructure renovation management.

Within the public sector, the two major segments are state and local governments, and federal governments. While federal governments were among the early adopters of GIS technology, recent trends toward devolving more responsibilities to states and localities have spurred those entities to become important consumers of GIS. Daratech’s estimates indicate that public sector revenues accounted for 37% of GIS/Geospatial software revenues in 2004, of $531 million. Of the public sector revenues, state and local governments accounted for 67%, while 33% was from federal governments.

Within the regulated sector, industries that are major consumers of GIS include utilities, telecommunications, transportation and education. Of these, the first two are by far the most significant. Utilities contributed 50%, or $278 million, of total regulated-sector GIS/Geospatial software revenues in 2004, while telecommunications companies accounted for 28%, or $155 million. By comparison, transportation accounted for 13%, or $71 million, and education for 9%, or $50 million.

Overall, Daratech forecasts that the public sector will grow 11% in 2006 as compared to a 4% growth in the regulated sector.