I had a rude awakening this morning!
Francoise had got up early to leave to pick up the grandchildren and drop them off at school. Shortly after leaving (I was still in bed!) she called me to say I should go quickly to move my car as there was a tow-away truck poised to lift it onto their lorry.
I rushed to put on some clothes and raced up the road. There was no problem and I was able to move my car. Fortunately, Francoise had left early and was able to intervene. But I had left the car there on Tuesday morning when I left for the European Space Solutions conference and returned yesterday (Wednesday evening) late. When I left there were no panels to say that parking was suspended. I learned that they must be put out at least 24 hours before the suspension which is not a lot of time for someone traveling a lot.
In the past, the police have called to say that the car should be moved but this time no call – except fortunately from Francoise. As I left another resident was remonstrating with the police who were unsympathetic. I heard one say “C’est ca Bruxelles” which is an expression often used here and is like a shrug of the shoulders saying “that’s what life is like in Brussels.” At least I had managed to avoid the loss of time and energy not to mention the cost of going to search for my car.
One hour later I went out to walk the dog. There were two other cars parked in the suspended area and no sign of any work going on.
We had a great workshop on Thursday! Organised as a session during the Geospatial World Forum in Rotterdam our goal was to discuss the results of our study into the Economic Benefits of Copernicus Sentinel data. It was the first (and only?) time that we brought together key persons from each of the 3 cases we have studied and we had a really excellent exchange. We just felt sorry for all those who were not with us!
Whilst the attendance might have been disappointing the exchange was not. We have just finished our third case (Pipeline Infrastructure Monitoring in the Netherlands) and with us were Ivo Visser (Stedin) and Jos Maccabiani (SkyGeo) who were instrumental to the case. SkyGeo is the service provider which represents one characteristic of this case which differs from the previous ones where the service provider is working for a public organisation.
Erik Willen (Skogforsk) joined us for the Swedish Forestry case (Anders Persson the primary provider from the Swedish Forest Agency was unfortunately not able to be there) and Jarko Toivola (Finnish Transport Agency) joined us for the Finnish Winter Navigation case. Everyone participated to what was a lively discussion on the results and on the future; especially the need for Sentinel data.
We were able to discuss comparisons between the 3 cases and the different approaches which were used to analyse each one. ESA also gained some useful insights into the needs of these users for future Sentinel data. It was agreed that it would be useful to revisit each of the cases in a few years time to update them as each one has elements to it which could be developed further.
I doubt that we shall have any possibility to repeat this workshop as to bring all the case principals together into one gathering would prove a real challenge (it has to be in the summer for a start or the ice-breaking season in the Baltic would ensure one absence!). It provided a very nice codicil to our study work.
Note all the case reports can now be found through our web-site (under library/studies and/or library/presentations and a single summary will be published shortly.
A few years ago, I used to keep another blog which I abandoned on which I would sometimes write about experiences of living in Belgium. My thoughts turn again to that blog as I think I have enough material to fill a book! Consequently, I shall include the (occasional?) blog here about some of these experiences.
Not so long ago, the pavement in front of our house and around the corner was extended. This work is being done at all junctions to stop uncontrolled parking and to make visibility better. It is difficult to complain but around us it has led to the loss of maybe 200 parking places which means that finding one has become a real challenge and is a real discouragement to go out in the evening. Thankfully, I am able to rent a garage nearby.
It is the same throughout Brussels and is a strong discouragement to commerce. The other evening, I wanted to stop somewhere just to get something to eat. Everywhere I tried, I could not find anywhere to park so in the end I just went home. This is a common story around the city and the lack of parking is definitely causing a downturn in business. I guess that this is not a problem specific to Brussels though. I’ll return to the subject in the future because even if there is a problem of traffic and the number of cars, the city has to work and Brussels is becoming in danger of just not working.
But this story is more about parking on my street. Because I rent a garage I never leave my car in front of the house. Despite this all the neighbours do, and each night the space is filled with 3 or 4 builders’ vans or cars usually the same ones parking there regularly. I think it is right that this should be tolerated; at night it causes no real harm, nor really during the day but it is clear that one should not park there even if it is not an actual offence.
The other day I received a parking ticket. I have stopped there maybe 5 to 10 times in the last 12 months for loading or unloading the car and this time, whilst I was inside, I had been given a ticket by the local police. Now, as far as I am aware, it is not an actual infringement; there are no road markings to say it is illegal, there is still passage for one car but the police officer disagreed despite the intervention of my neighbour. I was completely unaware of all this; I was inside fetching material which I was loading into the car.
Three weeks later, out of the blue, I receive the notification – which comes from the commune – and the fine. I wrote to the commune to complain. I explained that I was loading my car in front of my house, that I was committing no offence according to the code of the law (there are no markings) and asked that the fine be rescinded. A few days later I got a standard printed reply saying that since I did not deny the offence I would still have to pay the fine!
I wrote again this time explicitly stating that I denied the offence. I have still not had a written reply but I did get a phone call. I was told that after the first letter the affair was closed. There was nothing the civil servant could do!!!! Because I had asked politely I was punished. If I had written strongly the fine would have been cancelled – or so he led me to believe.
A few days later, Francoise receives a similar fine. We have written but as yet no response.
What a waste of time. The police make a decision - which seems to have no legal basis - to issue a fine. They send this to the commune. The civil servant processes it and sends it to the offender. The offender writes to say that he has not committed an offence, and the civil servant (presumably) cancels the fine. The neighbours who are parking there all the time, either they are not getting tickets or they follow this process each time. Well it all makes work for people I suppose, but truly the system is broken.
Several people remarked to me how EARSC was present in strength at the Copernicus Value Chain workshop organised by the European Commission this last week. Indeed, it was a very important meeting for us and the industry and overall, I was very pleased with the outcome.
Industry views were presented by EARSC representatives (from 7 member companies) in each of the 6 sessions; Chetan (vice-chairman) presented in the plenary and others spoke during exchanges. So we did indeed show that the question of exploitation is an important one for the industry.
My key take-aways were as I expressed in the closing session. I was very pleased with the change in language coming from the stakeholders in EC and in ESA. Over the last 12 months this has significantly changed such that the messages we have been delivering for some years now are gaining traction. This is not all good news! As the profile of EARSC is raised the demands for interventions in meetings, for positions on issues and for consultations is growing significantly. Our recent decision to become a participating organisation with GEO is adding to that and we are speaking at their meeting this next week on the proposed work-plan. All of which will force us either to prioritise or to encourage more participation from members – or most likely both.
But back to the workshop, where I was especially pleased with the speech by Philippe Brunet (you can watch it here). He made all the right points concerning (to take a few): private/public boundaries, industry access to data, the need for federated demand in Europe and the problems with delivering this etc. For the first time, I have the feeling that the needs of industry are being taken seriously. This stems from two sources in my view; firstly the shift in the whole Commission trajectory coming from Commission president Jean-Claude Juncker (as Rudy Aernaudt pointed out) and secondly by the realisation that if Copernicus is to deliver on its promise of more jobs in the downstream sector then action must be taken now. We shall soon (next year) start talking about the next financial perspectives - taking effect from 2021 - which will bring a focus on the results of the Copernicus investments. The Juncker focus on economy and jobs will certainly shine a light on the outcomes of the Copernicus programme, so we need to be acting now.
Other take-aways were the need to invest in internationalisation. For companies to be able to export, they need a reference in Europe. This means that as far as possible companies should be involved in the delivery of the Copernicus services. But for those who are not and for those who generate products which build upon the outputs of the Copernicus services, there is a need for some form of quality scheme which is also one key element of our proposed marketplace Alliance. We seek to develop closer links between the industry and the 7 European Entrusted Entities which have been designated for supplying the services. It would have been much easier for us if there was one responsible agency to interact with rather than 7 but unfortunately this has not proven possible in the past and is unlikely to do so in the future so we shall have to live with it.
In our paper on the Marketplace Alliance, we identify the need for the EO services industry to be given a sustained and efficient access to Copernicus data and information; which was perhaps the core subject of the workshop. Today, the best way for companies to access Sentinel data is through Google or Amazon services. For me it is not a question of geography but of business. The revenues of these two giant IT companies are around $100billion whilst for those of the average European service provider it is in the range €1 to €10m. Even European IaaS providers are dwarfed by their US cousins but are large compared to the European service companies. Hence, one goal of the Marketplace is to try to rebalance the commercial relationship. European companies can work with international partners – in fact they are excellent at it – and they will no doubt work with one or more of the US giants. But, they should not become dependent on them; hence our position to seek an alternative.
Hence, we found that this workshop was extremely useful to debate around the issues and to sensitise the EC to industry’s concerns. It has helped us to form new partnerships and to open new lines of dialogue. I believe that these will be useful over the coming months as we develop further the Marketplace Alliance.
What a horrific day yesterday. I am happy to say that we are all OK and that so far I have not heard of anyone we know being caught up in either of the two attacks. I was at home most of the day “in my office”. Like everyone we think of how we are not caught in the atrocities and of those who were. We had been at the airport on Sunday and could have been there yesterday. Ariane who would often be passing through Maelbeek at about the time of the explosion was safely in France; she seems to have sensed the danger and decided to stay there this week as I was due to be away.
We were due to leave on Sunday but our flight was cancelled at the very last minute (we were waiting to walk to the aircraft) due to the air traffic strikes in France. I had vainly searched for other flights for Tuesday. I could have had one on Monday but the strike was due to continue. There were no seats left at a reasonable price so we abandoned our plans for a week away.
We learned about the first bombs just as we left the house at 8am for our normal morning walk (with the dog). At the newsagents where we pause each morning to chat with Alain, he had the radio on asking if we had heard. Whilst we sat in the cafe, I searched for news on my phone. Once home we switched on the television for more news to see the first pictures emerging of smoke coming from Maelbeek station on Rue de la Loi. More rumours were coming of other explosions – happily they were false.
We sat watching the news emerge; it was difficult to work. Messages started to arrive asking if we were OK. We talked about the attacks and the reason why Belgium seems to be implicated. We exchanged with friends and family anxious for news. We noted that just one week previously, the hunt for the terrorists had led to the stand-off and shootings just down the road from our house. We talked about the airport and metro which we know so well and pass through so often.
Then the first picture of the metro wagon were shown and this was the moment for me when the full horror became clear. Up to then we had seen people injured, being carried on stretchers, we had heard witnesses talk of their experience, but no real indications of the extent of the explosions. The damage to the train made it clear; torn apart by the blast it would have been full at that time
Does it change much? Of course. I fear for our freedom, for Europe and very much for Belgium. Will it change what we do? Not at all. No doubt we shall reflect on the attacks and the danger next time we take the metro or pass through the airport. But I think everyone who takes a plane regularly thinks of the possibilities whilst rationalising that the risks of “it” happening to us personally is very small; infinitesimally small. So life goes on – or at least for most of us – for our thoughts like everyone in Brussels at the moment go to the family, friends and networks of colleagues of those who were wounded or killed at 8h07 or 9h11 yesterday morning 22nd March 2016.
On Tuesday, Monica and I paid a visit to Eumetsat at their invitation. It was a good opportunity to exchange on latest activities, to understand the Eumetsat plans and position regarding Sentinel data and to brief them on and discuss our plans for the Marketplace Alliance.
We learned that Eumetsat now has committed observation missions right through to 2040. This includes Jason which is now a confirmed mission to which Eumetsat contributes. Companies may have access to Eumetsat products through Eumetcast.
Eumetsat is looking at the evolution of many of its operations and plans a series of pathfinder projects. These are not yet public and will be decided by their council next June. They will include looking at data access technology, cloud services and exploitation platforms for higher level information services.
Eumetsat was very interested to learn about the EARSC initiative to create a Marketplace and expressed strong interest as a potential data supplier. The technical solution is also of interest relating to the pathfinder studies to be confirmed in June. We agreed to exchange further over the coming months and EARSC looks to include Eumetsat views in our study on the Marketplace as part of the stakeholder analysis.
As we prepare to support companies to exploit the anticipated opening of Copernicus and Sentinel data and information, Eumetsat has an important role to play as operators of 3 of the Sentinel missions. We anticipate developing closer links and to see how the meteorological data can become part of the Marketplace which we plan to see developed.
Last week, I was invited to present at the Polish Space Sector Forum in Warsaw. The invitation had been initiated by one of the EARSC members (Geosystems Poland) and I was very happy to accept and to present our ideas linked to the creation of the Marketplace Alliance. It was well attended with some 150 people present and most if not all the member companies of the Polish Space Industry Association exhibited.
I was struck by the dynamism of the sector and their ambition to play a role in the downstream business. This contrasted with the main presentations which were all about creating a “space programme” and developing a Polish satellite. If the efforts are successful, I hope that there is enough room to support downstream efforts as well and this is not crowded out by the space manufacturing interests.
Many of the companies spoke with me about the Marketplace Alliance and how it is clearly industry led. There is a strong feeling of companies facing competition from institutes and other public bodies and that the academic view is given too much weight. There was much appreciation of our message about clarifying the roles of the public and private sectors and that this could be conveyed to the Polish decision makers. I was happy to oblige during my presentation and welcomed the opportunity to hear first-hand from the decision makers regarding their ambitions for the space sector; just a plea to remember to take adequate care of the downstream services part!
Just before Christmas, Google and the UN-FAO announced that they are to collaborate to make geospatial tracking and mapping products more accessible, providing high-technology assistance to countries tackling climate change and much greater capacity to experts developing forest and land-use policies. "For FAO, this is not just a partnership. This is a strategic alliance," said FAO Director-General José Graziano da Silva.
This partnership will see Google Maps providing 1200 trusted tester credentials on Google Earth Engine to FAO staff and partners, while also providing training and receiving feedback on users' needs and experiences. Ironically, the software which FAO bring to the partnership (Open Foris) has been developed with the financial support of Finland, Germany and Norway.
The agreement shows the power of geo-information to transform lives; in this case by enabling FAO workers in the field to quickly get access to key information. It is a powerful reminder of the public good benefits which EO technology can bring.
It also shows once again how European investment and innovation is not fully exploited to the benefit of the European industry and this chimed with the recent report which I read from GP Bullhound looking at the relative performance of Internet companies in Europe and the US (see my previous blogpost). It is clear that we do not lack innovation in Europe but we do somewhere lack the ability to turn this into global business – as Google has done and of course the other “FANG’s” (Facebook, Apple, Netflix, Google) which have dominated the US market over the last year, not to mention Uber and Airbnb.
In May this year, GP Bullhound has published its second report [1] on the European “unicorns” and comparison with others around the world. A unicorn is a start-up company which has managed to reach $1b in valuation and GP Bullhound is looking particularly at those engaged in internet technology.
The findings are interesting in that they show the gulf between Europe and the US in particular. They find a total of 40 unicorns in Europe compared to 30 (net gain of 10) for the same survey conducted in 2014 with 13 new ones appearing and 3 having dropped off the list. In the US, there was a net gain of 22 unicorns.
Then, taking the 3 top valued companies in the US, their total valuation is $0.75t. This compares with $0.5t for the top 3 in China, $50b for the top three in Africa, but only $25b for the top three in Europe. Furthermore, whilst the total value of the unicorns in Europe is around $120b; Apple alone has a value of $750b, Facebook is at $240b and even Uber is valued at $50b. Clearly Europe has a long way to go to catch up.
What can we learn? I was reminded of the two acquisitions last summer where Urthcast bought Deimos Imaging and PlanetLabs bought Blackbridge/Rapideye. Europe is good at research and innovation and even early development but is less good at exploiting the results. It seems that European owners sell out early rather than running their winners to achieve bigger gains later. CartoDB is another example where this happened along with a well-known example, Skype. Developed in Europe; Commercialised in the US.
Our goal at EARSC is to help develop the industry. 2016 promises to be a significant year when maybe we can start to see some of the potential being realised.
I hope that many of you may already have seen the report we have published concerning the economic benefit of using satellite imagery (SAR) to support the ice services in Finland and Sweden? If you have not, you can find the report on our web-site; I think it is quite easy to read as we tell the story of how the ice-breakers work during the Baltic winter.
It should be the first in a series of such cases where we taker a single product and trace its impact through the chain of users ending up with the citizens; hence the title of the story “Satellites Benefiting Citizens".
The basic story about the use of the imagery by the ice-breakers is quite well-known but I am unaware of any work which has gone into the detail of what is going on. Indeed, the idea stems from the large socio-economic studies carried out by PwC, Booz etc for the EC which start top-down and look at the gross impact of the use of EO technology. Such an approach can never get inside the value-chain and look in detail as we have done. The two methodologies are complementary.
The results have been really surprising. I started out with the idea that we would take a value-chain which would show maybe a few €100k of benefit (or maybe a few €m) and that since there are thousands of EO products, simple extraction would lead to many €b of benefits in total. Hence I was surprised to find the benefit to be up to €100m per annum and even this number I think is conservative.
We were hindered in our work by a lack of an overall analysis of the benefits which are generated by the ice-breaking services. Next year a new model (developed under the WinMOS project) should be in-place which will allow these benefits to be calculated and which will support investment programmes in Finland and Sweden to renew their ice-breaker fleet - where some of the existing ships are 50 years old. What is then the added-value of the satellite imagery? Well that was the challenge we had to master and where many of the assumptions lie. We should like to go back and revisit the case when the WinMOS model is complete; yet the messages without that detail are clear.
Satellite imagery, in this case SAR, is benefiting the Finnish and Swedish economies by between €24m to €116m a year. This large range is a result of the assumptions which we have been forced to make which no one has yet challenged. We have deliberately set our assumptions to be conservative to avoid such challenges and further analysis could well show that the overall benefit is higher. The main impact is on keeping ports open and allowing factories to keep working and communities to work throughout the year. Of course this could happen without the imagery but not in the same way and certainly not with the same efficiency. The result is extendable to other countries around the Baltic and to other areas where sea-ice blocks ports in the winter period.
We were very grateful for the direct support of experts in the two countries for the time they gave us. For our methodology to work, we need that so as to be able to dig into the processes and understand exactly what is happening and where the imagery is having an impact. It implies that the process should be operational and in use for a few years. We currently are extending our work to further cases and would be very interested to have proposals for new ones to look at. Please get in contact if you know of one that we could analyse.
If you have not already seen it, we have just published our latest survey of the industry. The 2015 survey follows our first one made that 2 years that takes a comprehensive look at the state of the EO services sector in Europe and Canada. The results are very detailed and provide a very effective basis on which we can develop our messages to policy makers concerning their decisions where they impact on the sector.
Probably the strongest message is that the sector is growing strongly. All the basic measures of employment, revenues and the number of companies are growing at between 8-10% per annum. This has been relatively steady since the first survey was conducted in 2006 (not by EARSC) although there are some signs that the rate may have slowed after a burst between 2008 and 2011 caused by the creation of several new satellite operators with new satellites launched around that time. From the recent survey, the growth has been picked up in the value-added services part of the sector which has grown to generate 50% of the total sector revenues. The total revenues in 2014 were €911m.
Similarly, the number of employees has grown from just under 6000 in 2012 to nearly 6811 in 2014 and the number of companies from 389 in 2012 to 451 in 2014.
The report available on our web-site is packed with charts and figures and there will shortly be an even longer report with even more data contained in it. We are also asked to carry out further analysis on specific matters using the data which we have collected and we are happy to do this. We are currently deepening our understanding of the Dutch sector and hope to be able to support studies into other countries in Europe.
As a further step, we shall start to look at some regions outside Europe and will be happy to explore this further with local organisations. If we can develop consistent and comparable data sets for the industry around the world then we can all get a better view of how our sector is evolving. I'll try to write further on specific topics in future blogs.
I was interested to see that the BBC has announced that the final round of its tender to find a supplier for its weather services will not include the UK Met Office - so ending a 93 Year relationship. In the accompanying statements it is suggested that the competition could be won by - shock-horror - a New Zealand or a Dutch company. The BBS says it is forced to take this action by its charter and new commercial relationships.
Whilst this is no doubt a political statement it led to a predictable reaction where people are crying out that it is unacceptable that one British institution is not able to support another one. There is outrage that the new supplier could come from overseas at the expense of a British one.
Of course, I welcome the decision to tender the service; it is how it should be and how the market should work. I suggest that the BBC has a duty to get value for money and should seek the best offer it can. That they say they are obliged to do so by their charter rather than as a move to seek best value for the taxpayer is disappointing.
The real lesson for me is that there is no mention of other UK bidders. It seems to suggest that no UK company has the skills or capability to meet the BBC needs – or at least at a price which is lower than the Met Office. It shows the danger of preserving a monopoly and especially that from a public body. Had the Met Office been forced to make its data available for open use, instead of waiting for European Open data directives, UK commercial companies would have been able to develop and would now be in a position to make competing offers to the BBC. Of course this would mean that the Met Office relinquished its monopoly on weather services, but in a wider economic sense and for the benefit of the UK economy at large, maybe a new services industry would have thrived in a sector in which the UK has an extremely strong track record. It is notable that those claiming that the BBC should continue to work with the Met Office at any price are defending this by saying that the UK is the world’s best at weather forecasting.
The wider lessons are clear, the duty of public bodies should be clearly defined irrespective of their financing. Asking PSB’s to subsidise their governmental tasks with commercial revenues leads to restrictive practices and unfair competition with the private sector. In some cases it is right that a public body continues to offer a monopoly service in the interests of all citizens; policing and public health and safety come to mind (although there are some mixed models even if we mostly no longer have private fire or police services). The government duty on behalf of the citizen is not challenged. Even public weather services could be maintained by government in the a public interest but the boundary with the private sector should be clear where companies can be confident to invest (as in the case to provide services to the BBC).
In the field of information services, mostly the public role should be limited to defining the information which is required and to acquire it. Mostly the services can be delivered by private organisations. We seek to introduce more clarity in this respect for Earth Observation services and by so doing create more opportunities for the private sector to deliver economic benefits to governments.
This is by way of a personal subject this time, but is linked because I wrote about Airbnb in a previous post comparing their business model with our sector.
I have just tried to use their services for the first time and am astonished and extremely disappointed to find them not entirely honest in their actions. I am traveling to UK for a long weekend and thought that I would book accommodation through Airbnb. I specifically set my options to have prices in GBP and expected to pay in GBP. I was then surprised to find that the bill was presented in Euro. I challenged this as I always follow the policy to pay in local currency on other sites to avoid the hidden charges which are applied. In other words, the credit card company use a competitive exchange rate and do not make administrative charges. Amazon is quite bad in this respect and must make a lot of profit on currency dealing for their customers but they do offer the option of which currency to pay in so as long as you are aware of this and careful then it is OK.
But Airbnb policy is to charge in the currency of the country where you live. When I challenged them on this they pointed me to a clause in their conditions which indeed states this. Of course this brings an extra 3% charge to me as this is the administrative charge which Airbnb make for effectuing the currency change - which I do not wish for. In reality they have no costs at all because they are accepting and paying in all different currencies so it is merely a question of balancing their accounts. An extra €20 on each transaction certainly contributes nicely to their bottom line and of course I learn that it is in line with their declared policy; but I can't help feeling it is taking advantage of their customers in a way which I find unpleasant.
DigitalGlobe’s decision not to sell its data to clients which are offering map products based on that data for free makes perfect sense; even if the initial market reaction (a sharp fall in the share price) seemed to the contrary. However, logical the move towards free and open data may be, it has a strong impact on the market for satellite data. In our “Geese and Golden Eggs” report in 2013 we stated that commercial operators would be affected by the decision to offer Sentinel data free of charge. We also noted the commoditisation of satellite data as more suppliers enter the market and that these two forces would be driving the cost of data down.
This is still happening and the threshold point at which value can be obtained from selling data is being forced down from 5m to lower today. The limit of free data coming from government satellites remains at around 5m to 10m driven by the Sentinel 2 performance but the arrival of the new businesses like Skybox, Planetlabs and Urthercast has put more commercial pressure on data prices and pushes the price of imagery down at lower resolutions ie around the 1m mark.
But the free and open philosophy does not just stop at satellite imagery and Google and others offer many map and geospatial products for free based on other open sources. The Internet abounds with free products as new companies seek to develop new business models and find new sources of revenue; open sources are everywhere. This is a very disruptive market and I have previously noted the similarity between the forces on the satellite data market and on taxi services (from Uber) and hotels (from Airbnb).
Hence, whilst DigitalGlobe is able to offer a premium product without much competition, they have two options; accept a premium price as the price for allowing an open license on the data, or restrict sales. If they choose the former then customers who do not want an open license will demand a lower price in compensation hence they choose not to sell data on those conditions. Hence either Google and others introduce a charge for products containing DigitalGlobe data or they cannot have the data.
Since there is no competitor which today can undermine that policy, DigitalGlobe can protect the price point in the market and has taken the decision not to sell to Google and others. How long can this endure? Airbus and Imagesat are supposedly already working to bring higher resolution data to the market in competition with DigitalGlobe. But it is unlikely that a second source will be enough to force change. Will other suppliers emerge with a 25cm resolution offer? These are expensive high performance systems which require a lot of investment. DigitalGlobe state that 65% of their sales are to the US government and whilst the DG of the NSA recently said he would be looking at some of the new systems as potential suppliers of data, the military and security demand for the highest resolution will remain. Whilst we can hope (expect?) that this proportion will fall as new markets emerge, it would seem that government policy will remain the key determinant for the satellite operators.
But perhaps the biggest risk for DigitalGlobe and others is that refusing to supply a large client may induce them to develop their own sources. Google has more than sufficient resources to support Skybox with more performant systems. It is always dangerous to refuse to supply a major player in any market. Power in the value-chain is everything (just ask the french farmers for their views on this), hence maybe the biggest risk for DigitalGlobe from this policy could be to induce a new competitor which would ultimately also eat into its share of the US government market.
The article with that title in the Economist last week left me thinking about the impact on our sector. The empire concerned is Silicon Valley and the Geeks are those who have made their money in early internet ventures and which now form the main source of new venture-capital funding.
The author describes how companies in the area are worth over €3 trillion, yet of those which have not yet gone public (IPO’d) or been bought out by other larger companies such as Google, Microsoft etc, a large number are privately owned. Whilst in 2000 companies were coming to the market (as an IPO) on average 4 years after start-up, today it is 11 years. So it is often young, technology-savvy, private investors who have made their money earlier in the dotcom bubble who are financing the firms of today and tomorrow.
The Economist wonders if this will lead to problems in the future as, without the pressure of public oversight, a lot of this capital is probably being misallocated ie higher risks are being taken than traditional capital from Wall Street would accept and which will not lead to profitable return. They also point to the lack of transparency as a result of private ownership and hence the propensity to avoid paying taxes and other social obligations through the ability to move revenues and resources around. But this is the future and today we see this “new” capital also being deployed in the EO services sector in Europe; but as industrial investments not merely financial ones.
Two recent examples illustrate this quite clearly as I wrote about in my last blog; Deimos Imaging acquired by Urthecast, Blackbridge/Rapideye being acquired by PlanetLabs. Further back, in 2012, the Spanish GIS/mapping company CartodB was acquired by ON24 a large Silicon Valley based company and, whilst many of the technical capabilities remain in Spain, the company is now based in New York and all the non-technical management positions are based there. As was reported in start-up beat in September last year:
A Q&A with CartoDB VP of Marketing Álvaro Ortiz. The New York City-based start-up, which offers an open source spatial mapping application, announced earlier this month the closing of an $8 million Series A funding round. It was founded in 2012 by Sergio Álvarez-Leiva and Javier de la Torre.
Hence future investment decisions and all the returns are taken outside of Europe even if the technical jobs remain. I am sure there must be other examples as well. Hence European value-added companies are being squeezed with the data, the software and the IT platforms all becoming dominated by larger US companies.
Is this a good thing? It highlights the strength and desirability of European technology. But it also shows the lack of risk appetite from European investors. In Europe I believe we have plenty of innovators and entrepreneurs, but we only have the “old” money which is far more risk averse and less technology oriented. The “new” money is not very much available in Europe. In the short term, it can be good news for the companies wishing to develop, but in the longer-term it means that Europe risks to miss out on the EO services sector and that most of the returns will end up in Silicon Valley.
What can we do? Should we do anything? After the investments made in Europe over the last 2 decades and especially that now being made in Copernicus, personally I would be very disappointed if we cannot foresee at least one player capable of competing in the global market. I should like to see a European platform emerge which is not beset by fractional interests of the Member States. Can we do this? I am not sure but if we do not try, the fruits of decades of investment risks to be lost.
Am I being too pessimistic? Please feel free to comment and discuss on this and any other issue. At EARSC we shall continue to fight for the European EO services sector and all views and contributions are welcome.