The Earth Observation sector is growing at a tremendous pace, with several private and government players set to launch dozens of satellites in the near future. Here is a summary of five interesting developments related to satellite data and its applications globally.
The global Earth Observation (EO) sector is growing at a rapid rate, with hundreds of satellites expected to be launched in the coming years by both commercial companies as well as public institutions. One can analyze several technologies and market trends related to this sector — from the different types of sensors to be launched onboard satellites to the role of artificial intelligence (AI) in processing and making sense of satellite data. However, five high-level yet equally important strategic trends stand apart as they would eventually lay the foundation for the growing EO sector and increase its prominence within the wider space industry.
Sovereign Earth Observation
Leveraging on the advancements in the space industry — such as decrease in cost of access to space, increase in miniaturization of satellite systems and subsystems, and introduction of innovative business models such as ‘space-as-a-service’ — several countries are investing in EO constellations as part of their national space strategy. This includes an announcement by Australia earlier this year to design, construct, launch and operate four new EO satellites; an announcement from the UAE on their SAR (Synthetic Aperture Radar) constellation, as well as plans from commercial EO companies to contribute to the Earth Observation data policies of their respective governments, such as LatConnect60 in Australia and Nara Space Technology in South Korea.
There are three specific drivers for these developments:
- Global trends, including climate change and evolving geopolitics:
The war in Ukraine has pushed countries around the world to strengthen their strategic assets, one of which happens to be the use of satellites for Earth Observation, for national security reasons. This, combined with the climate crisis and particularly the need to invest in environmental monitoring tools, has provided the fundamental rationale for countries to invest in EO.
- Strategic interests for sovereignty and data independence:
Although there are hundreds of EO satellites in orbit from both institutions and commercial companies, and thousands planned to be launched in the coming decade, most countries are interested in making sure that they are data independent for sovereign purposes. This has led to a few EO national constellations being announced by some countries, even if they are not significantly different from those already in orbit.
- The socio-economic rationale for EO:
As much as EO is strategic from a global perspective, for each country, investing in the sector guarantees advancement of skills for the local population, as well as thousands of jobs. While this depends on whether there are existing capabilities within, there is considerable pressure to have a roadmap towards indigenous capabilities, through the private EO sector.
The emergence of the ‘as-a-service’ models
What makes the trend of sovereign EO possible and somewhat easier to implement is the emergence of the ‘space-as-a-service’ and, more recently, ‘satellite-as-a-service‘ models.
‘Space-as-a-service’ models allow governments to contribute to the EO mission by supplying the critical payload, while essentially ‘outsourcing’ the rest of the space segment to commercial companies.
These include companies such as Spire and Loft Orbital, which are responsible for payload integration, assembly, and testing, launch service agreements, and satellite operation. This model enables the private sector to contribute to the design of the mission, as well as the manufacturing of payload, thus ensuring that the economic rationale for the EO mission is guaranteed.
‘Satellite-as-a-service’ models are a recent development. For example, ICEYE, the Finnish microsatellite SAR player, announced recently that it would deliver its new offering of fully operational SAR satellites in the coming months. This model allows countries and companies to acquire readymade satellites from manufacturers like ICEYE, thus ensuring that the assets are fully owned by customers such as themselves.
Interestingly, it is also now possible to acquire EO satellites already in orbit, as seen in a recent announcement from NanoAvionics wherein the company said managed to sell one of its orbital satellites to an unnamed buyer.
While these two models are often used interchangeably, there are obvious strategic and financial differences between them. Some countries choose one of the two models based on their budgets and specific needs. However, it should be noted that traditional satellite manufacturing contracts are not going away as yet.
For instance, Airbus recently got EUR 160-million contract for the European Space Agency’s (ESA) FORUM satellite to measure heat emitted from the Earth into space. FORUM, which is short for Far-infrared Outgoing Radiation Understanding and Monitoring, will be the first satellite to observe Earth in far-infrared, and provide unique measurements of the planet’s outgoing energy to help improve understanding of the climate system.
Backward and forward vertical integration models
Vertical integration models are increasingly becoming common in EO — not just from a space segment perspective, where a company decides to design, build, and launch satellites through in-house capabilities, but also going down the value chain into the downstream industry. We are seeing two trends of vertical integration in EO — forward and backward.
‘Forward Vertical Integration’ is the most common kind, where organizations are not only vertically integrated in the space segment, but also choose to own the development of products based on data from satellites. Some companies do this in an opportunistic way, whereas some have a strategic rationale as seen from the development from Planet, which announced ‘planetary variables’ leveraging on their acquisition of Vandersat.
Planetary Variables are pre-processed, accurate data feeds that measure conditions on the Earth’s surface of the Earth to capture and quantify the changes in dynamic systems and render that information to decision-makers on the ground.
This means that Planet is not only attempting to own and control business activities that go beyond the acquisition and distribution of EO data, but also verticalizing within agriculture, that is, focusing on developing capabilities for a specific vertical as opposed to offering horizontal capabilities for solving problems across verticals.
‘Backward Vertical Integration’ is an emerging trend among organizations deciding to develop their own EO capabilities as a function of their business. This could mean companies investing in building their own in-house EO functions and leveraging data from existing commercial and institutional sources (also known as ‘data strategy’).
But this could also refer to companies that are choosing to invest in building their own EO constellations, either from scratch or through strategic partnerships/investments with existing commercial EO players (also known as ‘space strategy’). Husqvarna’s Intellion and Hitachi’s Vegetation Manager, both vegetation monitoring tools, are examples of the former approach.
Plans from companies including Tomorrow.io, ExxonMobil, and Palantir are different versions of the latter approach. As the EO industry evolves, it is expected that more EO companies will decide to verticalize and build products for specific industries and use cases, thus vertically integrating forward. Some others that are outside the EO industry will choose to not only acquire data from existing EO players but complement that with their own EO capabilities, either with a ‘data strategy’ or a ‘space strategy’.
The evolution of go-to-market strategies
The past few years have seen a rapid expansion of the go-to-market (GTM) strategies employed by commercial EO companies as they scale. Depending on the segment of EO, they differ as explained below, but it is significant to note that there is no right approach, given that the commercial EO market is still in a very nascent phase.
Most companies offering EO ‘data-as-a-service’ from their satellites hope to win several longterm, indefinite quantity contracts, as well as subscription-based contracts. But often, anchor customers play a key role in the development of both the company and the sector, as seen from the US National Reconnaissance Office’s multi-billion contract for BlackSky, Planet and Maxar to acquire Electro-Optical Commercial Layer (EOCL) satellite imagery for meeting increasing customer demands.
One of the biggest questions in the development of a commercial EO sector is whether there will be enough anchor customers for companies that are developing EO data capabilities solely for use across various industries.
- The GTM for EO companies
Several EO platforms are under development, both by big tech companies such as Google, Amazon and Microsoft and also from within the EO industry — such as Open Cosmos, Earth Blox, and Astraea, which were in the news recently. Although platforms will play a key role in improving the accessibility, fusibility and usability of various types of EO data, my belief is that for building scalable EO applications for use across governments and enterprises, some of the platforms will become thematic in nature. This means that although they will continue to support various generic use cases, some of them will verticalize to offer in-depth domain-specific data and develop expertise for specific markets.
The GTM for EO platforms is straightforward — to acquire as many as possible, ideally with as many users as possible, who will pay subscriptions for access to the platforms. But platforms are just tools; they need business cases built around them by the organizations that use them, for them to become successful.
- The GTM for EO products
This refers to companies that offer software products built by leveraging satellite data focusing on a specific use case or use cases within industries. Apart from a direct GTM approach where companies try and distribute their products straight to the customer, two of the most interesting GTM strategies for EO products are based on partnerships and core integrations with the large enterprise software companies (SAP, Oracle, IBM, Salesforce etc.) or the market leaders within the specific verticals, as seen from the announcement from flood mapping startup Cloud to Street to partner with Raincoat, a parametric insurance provider, and Munich Re Group to launch a flood insurance product in Colombia. The national program will make flood insurance policies available to 100,000+ Colombian farmers for the first time.
Based on strategic partnerships with the large consulting companies of the world (BCG, Aon, PwC, Deloitte, Accenture, etc.), as seen from the announcement from Jupiter Intelligence, one of the largest independent sellers of climate risk information, to enter into a new strategic partnership with Boston Consulting Group to help its corporate ESG practice and clients, the company first told Axios.
The era of commercial weather satellites
Today, we have several satellites monitoring the weather and acquiring data about various geophysical variables to help us understand and predict the weather on Earth. Most of these satellites are owned and operated by government agencies in USA, Japan, Europe, China, Russia, and South Korea, among others.
The role of the private sector in weather has been largely focused on improving the modeling capabilities based on data already collected from the government satellites, which are, in most cases, incremental improvements.
However, in the last few years, companies like Spire and GeoOptics have started to offer GNSS radio occultation data and Orbital Micro Systems through microwave radiometers. Last year, Tomorrow.io announced that it will launch a constellation of precipitation radars and later this year, added microwave sounders to their plans.
Acme AtronOmatic, a vendor of the popular MyRadar mobile app, announced plans to launch a constellation of 250 one-unit cubesats equipped with hyperspectral, thermal, and visible cameras. More recently, Spire announced that it is adding microwave sounders from RAL Space to its constellation to augment its weather observations.
As climate change becomes part of the economic, social, political, and defense narrative, the commercial weather sector, which can be included within the EO industry, will play a huge role in the development of climate adaptation and resilience tools. NOAA, for instance, has allocated almost USD 1 billion for “climate data and services” over the next five years.
Much of that will depend on the advancements in the private sector, not only with respect to launching advanced sensors, but also the modeling, processing and dissemination of weather and climate information. Spire’s multimillion dollar contract with TCOM is an example of the kind of adoption of commercial weather services from the defense sector. The five-year agreement includes comprehensive weather forecasts, alerts to notify aerostat site operators in case of bad weather forecast, weather training for site managers and site leads, and a contact center offering weather information 24×7.
The goal is problem solving
As global crises such as the pandemic, climate change and the war in Ukraine create new demand for EO data and products, it is imperative that we start looking at solving problems through an objective and holistic lens.
Eventually, the issue is not about a specific type of sensor (hyperspectral vs infrared vs SAR vs Lidar), not about a specific medium (satellite vs aerial vs in-situ), not about EO vs weather vs GNSS, and certainly not terminologies such as geospatial or spatial or location intelligence. We need to be focused on the impact of EO on the customers, how it helps them get their job done, and in that process contributes to solving larger environmental, societal, and economic challenges.