A CONVERSATION WITH THE EDITOR
The State of Commercial Remote Sensing Market:A Conversation with Ron Stearns of Frost and Sullivan
By Adena Schutzberg

   Ron Stearns is an analyst who covers the commercial remote sensing and Global Positioning Systems (GPS) markets for Frost and Sullivan. Stearns is author of North American Remote Sensing Vertical Markets, a report published by the company in July, and World Commercial Remote Sensing Imagery, GIS Software, Data and Value-Added Services, published last year. I asked Stearns for his perspective on the current state and future expansion of commercial satellite remote sensing.

   He started off with a bit of a historical perspective. In the late 1990s the use of remote sensing data from both satellites (lower resolution ones like SPOT and the Indian Remote Sensing [IRS] satellite) and aerial platforms was significant. Utilities and communications providers were taking advantage of the technology and buying data. As wireless became the hot ticket, more companies entered the fray looking for digital elevation models so they could effectively place cell towers. But, the return on investments with so many players in the wireless communications markets did not meet expectations, and demand dropped. At about the same time, the economy slowed, and along with some questionable business practices, helped pull in the reigns on utilities and communications company growth. That’s just about the time the high resolution satellites came online (Table 1).

   Stearns offers that this history puts today’s satellite companies in a position to look for “non- traditional” markets, to “diversify” from these formerly active market segments. Where will they go? He suggests areas such as forestry including lumber, paper and land conservation, and security, including airport perimeter management. He’s quick to point out that these “businesses” typically receive some of their funding from federal, state, or local governments. That led me to ask about the definition of a commercial remote sensing market.

   To Stearns way of thinking, there is a commercial market if the company is in business to sell products and make a living. It doesn’t much matter who is buying or from where their funding ultimately derives. He suggests that it’s indeed likely that the new customers for commercial remote sensing will get a decent share of their dollars to spend from some level of government.

   Stearns goes on to note that he’s heard the question regarding the potential or existence of a commercial satellite remote market regularly over the past seven or so years. And, as he puts it, he sort of “turns a deaf ear to it.” Why? He suggests the commercial satellite remote sensing market is being held to a “different standard” than other technology areas. He notes that large system integrators (for example Lockheed Martin or Northrop Grumman) likely get some 10-20% of their revenue from the commercial arena. Why, he asks, are the satellite remote sensing companies chastised for having figures around 30-35%? “It’s not off by an order of magnitude; they are really in the same ballpark,” he argues. As another example he points to General Motors. No one gives that company a hard time based on its significant sales to the government and the military. Why then, I asked, are we holding satellite remote sensing to a different standard?

   While Stearns won’t go so far as to say that early proponents of satellite data including investors, consultants, and the data providers themselves consciously inflated expected revenues and costs, it’s clear that once the birds were up, small commercial players like real estate companies could not afford to buy specific scenes. Now, of course, with more data archived, those prices are coming down, he notes. He cites a disconnect when it came to technology, especially in the early days. The satellite imagery vendors and their users didn’t really know the extent of processing and packaging that would be needed to make the data immediately useful. What those “enhanced” expectations mean, he offers, is simply that the uptake in the business and consumer market will take more time than expected. Still, he doesn’t expect to see the percentage of sales coming from the non-defense side to jump significantly, even in the long term.

   Stearns points out, too, that the reliance on defense funding for commercial remote sensing may not be all that bad. From the companies’ perspectives, working with the defense sector enables a focus on just that sector’s needs, something that would be far more difficult for several (or more) smaller commercial market areas. And, there’s little doubt that the U.S. defense sector can and will bring money to the table. To date, few, if any, players from other sectors have been able to do that. “Companies have to survive. They need to serve the customers who keep the lights on,” Stearns explains.

   I asked Stearns to suggest a business analogy for the satellite remote sensing market, against which to compare its growth. He chose the computer industry, noting that early large computers were funded by the government, as was the development of the Internet. Back then, in the 1950s, there was no commercial market for computers. Now, more than 50 years later, computers and the Internet are a regular part of many lives. “This is a decades-long cycle. In time satellite imagery may well be a part of everyday life.” The most likely immediate place for that, according to Stearns, is as part of in-vehicle navigation.

   To wrap up, I posed a broad question: How well are remote sensing users taking advantage of the data available? Stearns sees that while end users might be able to find and use some broad context higher level data, the job of identifying, locating, and pulling together data sets typically requires a level of skill beyond most casual users. There are still many interpretive services to be performed to allow an end user to make an informed decision based on remotely sensed data.

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