Data is to ESRI as Search is to Google

Do you remember the SAT exams?  These word games were always fun, so let’s play.

Google is not a web search company, but rather Google is an advertising company (they generated 97% of their revenues from advertising in 2009).  Search is the candy they give away to you so they can market advertising services.  Granted without search they have no advertising sales, so it is hard to separate Google from search.  But the point is that the company uses search as the marketing material to sell its products.

In previous posts (here and here), I have made the case that the mapping industry will change because players like Google and Microsoft (and Apple) will create mapping services embedded in their products as a feature enhancement.  The dollars that these companies are willing to spend on creating mapping products as features to their main business lines create “gravitational” distortions in the geospatial industry.  (For example TomTom stock is down ~60% since Google canceled its Tele Atlas contract in October 2009 and released its own turn-by-turn navigation system for mobile phones using the Android operating system. )

What was a bit unexpected was that other professional software companies would follow this free “Data-as-a-Feature” business model.  Yet this is exactly what ESRI has done.  Over the past couple of years, they bought a big piece of i-cubed to provide raster imagery products to their customers, and they have cut deals with data vendors, such as Microsoft Bing Maps, DeLorme, Tele Atlas, and others.  They have brought free data to light from federal agencies like USGS.  And they are combining these sources (with their stellar cartographic capabilities) to create derivative products that are extremely useful and appealing.

Just look at this topographic synthesis product from ArcGIS Online.  At the FedUC, Jack showed 1:1000 scale topographic data for selected cities within a worldwide map.  Nice and oh and by the way, it is free to users of ArcGIS Desktop products who maintain their license.

Data-as-a-Feature for ArcGIS Users

ESRI is a software company and generates most of its revenues via software sales and maintenance.  In fact, I’ve heard ESRI claim they have >90% of the core professional GIS market.  Data is the “new” free candy that ESRI gives away to maintain its market dominance in GIS software.  You have to admire the strategy to leverage their market dominance.  Data is a necessary “feature” for working in the GIS field.  Getting quality data, styled with beautiful cartography, as part of your content creation tool is a great benefit to users of that tool.

Software customers may be happy with data-as-a-feature; and anecdotal stories from GIS software integrators and solution providers suggest their customers are quite happy with the free regional products ESRI.  However, for independent data vendors it is a scary prospect.  If you produce regional or worldwide data, you can either sell your product to ESRI at “their” price, or face the prospect of losing access to their ecosystem of GIS developers by virtue of ESRI (re)creating the free product.

Life for independent data vendors has become more difficult.  On one hand they have to worry about Google, Microsoft, and Apple creating free worldwide data sets and applications to enhance their products.  Yet, I think these data vendors may have gotten used to this new paradigm and sought refuge in the “professional” data quality niche.  However, another hand is now in the picture (and in their till) with free professional data.  That hand is ESRI with its free Data-as-a-Feature.