Updated: Jul 27
Hosted 24th March
To watch the recording of the whole event, click here.
Continuing on from February’s event covering the expansive opportunities of the Earth observation industry, which you can read more about here, Nicholas Borroz enlightened us on the obstacles facing Earth observation firms in the current age.
Nicholas Borroz is a New Zealand-based consultant advising clients in the space industry. With his firm Rotoiti, he has supported clients in numerous areas including launch, satellite, subsystems, and data analytics. His clients are in both the private and public sectors, mostly in the Asia-Pacific, including in Australia, New Zealand, and Singapore. Nicholas formerly worked as a business intelligence consultant in Washington, DC. He is completing his PhD in international business at the University of Auckland. He received his master’s degree in international economics from the Johns Hopkins School of Advanced International Studies in Washington, DC.
Nicholas breaks down his presentation into three sections; contextualising the issue, obstacles to accessing and analysing data, and selling these solutions to customers.
Contextualising the Issue
Why does it matter that there are obstacles to the commercialisation of Earth observation data?
“There is an obsession with rockets and satellites in the space sector... “
- Nicholas Borroz
Since transitioning to the space industry, Nicholas has noticed an obsession with rockets and satellites - which is understandable, as they are the flashy, metonymic representations of the space industry and our endeavours into space. However, what is commonly overlooked is that rockets and satellites are just infrastructure. Nicholas pointed out that they must be built to enable space ventures, but at the end of the day, rockets and satellites cannot be built without justification for their purpose.
(Image: SpaceX Falcon 1 Rocket, the first privately developed liquid fuel rocket to orbit Earth. Source: NASA Rocketry Image Gallery)
And these purposes are the services they facilitate. Services are what justify infrastructure development, whether that is building rockets for commercial space flight or satellites for Earth observation. In particular, the infrastructure required for Earth observation is a great business opportunity, with one of the many examples of these opportunities being NDVI imaging of the earth to evaluate how much vegetation and biomass for the agriculture industry.
With all potential and opportunity, how can we tangibly make this a business?
The First Obstacle: Analysing and Accessing the Data
Nicholas breaks this obstacle down into four main issues:
Accessing and using Earth observation data is often expensive, which can render Earth observation and satellite services obsolete. Data is often sold in bulk, which is costly if the business does not need a majority of the data. The appropriate licenses required to use the data can also be costly, and licensing issues often create limitations on how users can transform the data into information that is useful and sellable to end users. Transforming EO data often requires different types of licenses, as well as the necessary support in navigating these licenses.
“Something I’ve run into is that many incumbents have their policies and end user license agreements written with little regard to modern processing tools,” adds Scott Owens, Head of API development at Arlula, “and we’ve seen a lot of users complain about useful imagery data sources not being able to be used commercially due to end user license agreements.”
There are a multitude of different types of Earth observation data, such as different sources of data. When analysing data, not only do we need to take into account active and passive sensing, such as synthetic aperture radar (SAR) compared to Google Earth images, we must also consider the differentiations within these sources of data. These differentiations vary from the ranging bandwidths and temporal fidelity to resolution and many more. It can be near impossible to work with different sources of data, meaning users often stick to just one data source.
Data collected from Earth observation satellites, as Nicholas puts it, is on a spectrum ranging from crude, raw information collected by the sensor, to the ultimate output of end user data, often in the form of a nice image. A major obstacle to analysing EO data is that not only can different sensors require certain levels of processing, different data types can be processed in different ways as well. Users must either limit themselves to one type of data at a specific processing level to analyse, which can be time consuming, or attempt to combine multiple types of data at different processing levels, which is also very difficult to achieve.
(The comparison imaging results of an optical image vs. a full-bandwidth SAR image. Source: ResearchGate, uploaded by Yashi Zhou)
Underestimating the Time and Cost
While the issue of time and cost has appeared in the last few problems, Nicholas places emphasis on firms underestimating the extent of efforts required to analyse Earth observation data. Even if the price point is manageable and users can isolate the necessary types of data and processing level required, analysing and making sense of the data still takes time and money. Analysing data requires people with the relevant subject matter expertise, which can either be hard to find, or hard to manage in order to produce results in a time efficient manner. This problem mainly targets the human resource and management required of firms, which can be overlooked if firms focus too heavily on their technical considerations.
The Second Obstacle: Selling Solutions to Customers
Following on from the last point, there are many business considerations in selling solutions to customers, as follows:
Limited Understanding of Customer’s Needs
A very basic, but crucial concept for firms is knowing what the customers want. In Nicholas’ experience, farmers are interested in data to support their fertiliser usage, such as how much they need, when the best time to fertilise is, how often it is needed and to be alerted when changes are required. As a business, if the firm is not aware of the actual needs of their customers, they can come up with an imagined problem such as issues with irrigation, which may not actually be in demand from the customer base and thus will not sell.
“If you come up with some potential need that you’ve imagined, but you haven’t run it by the people you’re intending to sell to… you’re not going to sell.” - Nicholas Borroz
Lack of Familiarity with the Business Segment
Returning to our example with the farmers, firms need familiarity with the practice. This does not only include understanding the industry, their questions and their needs. Firms also need agronomists and farmers to understand the process by which fertilisers affect the growth of crops and the biology of different types of crops among other variables. Without this information, firms and end users will not be able to make sense of the data. Earth observation analytical products are often conceived by people who are not familiar with the targeted segment, and thus firms require people on the team who understand the problems that customers are dealing with.
No Arguments for Cost Effectiveness
Firms selling products to customers need to be able to explain why the benefits of their product outweigh the costs. As outlined in the first type of obstacle for EO firms, time and cost is a significant barrier for Earth observation services, and the benefits need to be conveyed to sell the value of the product despite its cost-associated limitations. The net benefit of the product must also be higher than the net benefit of alternative solutions or potential services, making sure competition is taken into consideration. While these may sound like basic points, Nicholas notes that they are repeatedly brought up because these are actual issues that affect many EO businesses, many which don’t have sector-specific expertise or business people.
The space industry and its available and potential services are still relatively new, especially in Australia. Customers often stick with solutions and services they are familiar and comfortable with, and thus this is an area that still poses a problem for EO firms. Customers will need help to ease into the developing industry, which can be propelled with marketing to encourage the adoption of new technologies and services.
Price Tolerance of Existing Customers
This problem exists more on a systems level, as Nicholas mentioned that the current customers for Earth observation products are governments, defence and the military, particularly from the US. These customers currently dominate demand for EO products and tend to have a very high price tolerance. For example, the military will have little tolerance for failure or errors, and thus be willing to pay more for new products. New customer segments, such as the agriculture industry with farmers, may have much lower price tolerance for developing new products, and will not be as appealing for firms compared to government bodies. The current customers with high price tolerance can thus disincentivise EO analytical products and service companies from breaking into new industries and customer segments, limiting their business and overall industry growth.
Nicholas’ points evidently highlight many of the obstacles that Earth observation firms, and even the Australian space industry at large face - but armed with this new knowledge, firms can propel themselves to new heights with relevant considerations, mitigation strategies and even new business opportunities to address these problems.
Keep an eye out on our YouTube channel, as we’ll be coming out with more event recordings soon!
About Spiral Blue
Spiral Blue is a Sydney SME focused on building the next generation of Earth observation services with artificial intelligence and Space Edge Computing. Spiral Blue technology has applications in defence, city planning, utilities, and other industries. Founded in 2018, the company has recently launched its first Space Edge Zero prototype to orbit, and is now awaiting results of this in orbit demonstration.