[OSGeo-Discuss] Re: FOSS4GIS business models

Thu Jan 3 15:26:45 PST 2008

Paul wrote: "The trouble with the geospatial marketplace is that it is
relatively small, so the small proportion an open source company can
monetize is smaller still."

I wonder how this will change as the ability to obtain spatial
information improves and becomes more affordable?

 A few decades ago you needed 3 or 4 men, expensive optical equipment,
and a trained eye to produce maps. Now all you need is a teenager, a
motorcycle, and a GPS receiver.

I think you will find more opportunities for companies with a business
model built around FOSS as this trend plays out. Here are a couple of
examples from my own personal experience:

On entry barrier to GIS is initial data production costs. I have been
impressed at the difference the availability of USDA Aerial Photography
has made in the last few years. (The USDA provides 1 meter color
orthophotgraphy to most counties in California and other parts of the
United States on a yearly basis. This data can be accessed for free or
next-to-nothing.) This has allowed us to do things in my own office that
we couldn't have considered before. The cost of that type of imagery on
that large of a scale was just too prohibitive.

As geospatial data becomes cheaper, more up-to-date, and more precise, I
believe you will see the "entry-level" cost of GIS implementation at
different organizations drop. This is especially true of remotely sensed
data. Still, it applies to vector data as well. You can't find very many
California counties that don't have vector data available, although
licensing is still an issue in some places.

I believe there are a lot of markets for GIS that haven't been cracked
open yet. Land surveying is one of these. ESRI has thrown some darts in
this direction, but if you ask your typical land surveyor what GIS is
you would probably get some off-the-wall answers. I doubt even 5% would
understand how they could use GIS technology to improve the efficiency
of there own operations.

Another example is an experience I had recently when I volunteered for a
local Ranger District of the US Forest Service. I assumed the Ranger
District would have a GIS person on staff, or at least have some GIS
software and have people that could use it. This was not the case. Most
of the Forest Service staff at the Ranger Station didn't know what GIS
was, and they certainly weren't using it at a local level for forest
management.

Thinking about this makes me wish I had about a couple million dollars
in capital to spend. :] I still think there is great potential for a
company to educate potential clients on the benefits of GIS to their
particular organization, after which the company could then make an
honest profit assisting with the organization with a low cost FOSS GIS
implementations.

It's too bad I have so much fun as a land surveyor, or I'd have to put
more time into getting this type of business off the ground.  With the
US housing market in the toilet you never know what might happen... :]

There will be lots of opportunities for FOSS GIS in the future. (It
almost makes me want to buy stock in Refractions Research.) :] 

I think the key will be making more of an effort to find customers,
instead of waiting for them to find us. I'm not talking about existing
ESRI users, but rather people that have had little exposure to GIS to
begin with, but who could easily be GIS users if someone showed them
how.

Landon

-----Original Message-----
From: discuss-bounces at lists.osgeo.org
[mailto:discuss-bounces at lists.osgeo.org] On Behalf Of Paul Ramsey
Sent: Thursday, January 03, 2008 9:09 AM
To: OSGeo Discussions
Subject: Re: [OSGeo-Discuss] Re: FOSS4GIS business models

Xen is one of those things where the market is SO DAMN HUGE that even  
the very SMALL proportion of money that an open source company can  
wring from the marketplace is actually non-trivial in an absolute  
sense.  If Red Hat is only monetizing 0.01% of the Linux marketplace,  
that's still fine, because they are making millions.  The best market  
places seem to be "enterprise" software with large new markets.   
Examples of success stories are JBoss, Red Hat, Sleepycat, MySQL, and  
note that the last two are actually "sort of" open source companies,  
in that they still fall back on the software-for-sale model for  
revenues.

The trouble with the geospatial marketplace is that it is relatively  
small, so the small proportion an open source company can monetize is  
smaller still.  The problem with service-oriented FOSS businesses is  
that they don't make money from software, so the easiest thing to cut  
in budgeting is core software development.  Let the product languish  
for a while, it doesn't cost you anything as long as service business  
keeps flowing in.  Or, in the case of pure consultancies, don't do  
any core development at all, just use the software.  The service- 
oriented FOSS business I think has serious structural problems, not  
around providing good service, but around strong incentives to  
nourish the underlying software.

P.

On 3-Jan-08, at 8:58 AM, Christopher Schmidt wrote:

> On Thu, Jan 03, 2008 at 10:26:51AM -0500, Lucena, Ivan wrote:
>> Hi all,
>>
>> I am *not* going to disagree with Andrea, Gilberto, Paul, Howard or
>> anybody else. I just want to point out a interesting open source
>> business model that is making a big impact this days. I am talking  
>> about
>> Xen [http://en.wikipedia.org/wiki/Xen].
>>
>> I keep reading news and more news about new commercial products  
>> from big
>> software companies based on Xen. Is that possible on the GIS world?
>
> Depending on what you're reading (I can't tell from a quick Google  
> which
> types of stories you're talking about), I'm not sure how Xen really
> plays a part in the commercialization.  Xen can be used to host  
> products
> in a virtual environment, and if that is the case, there's no money
> being made off *Xen*, money is being made off the other software.
>
> I could be wrong. I just didn't find anything to back up either way in
> the Wikipedia and related links.
>
> Regards,
> -- 
> Christopher Schmidt
> Web Developer
> _______________________________________________
> Discuss mailing list
> Discuss at lists.osgeo.org
> http://lists.osgeo.org/mailman/listinfo/discuss

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