Location Intelligence opportunities: ESRI and Oracle point of view

Marco Santambrogio, 27/01/2011

Location is everywhere, customer expectations are soaring and location intelligence is being hit by a huge storm of business drivers...

It has been said that over 80% of business data now holds a component of location, but the question that still remains on everyone’s mind is how do you utilize this information to see a profit?

There are some extremely creative uses of location intelligence out there at the moment, from insurance companies, retail and advertising, to tracking, transportation and site selection. But with this rocketing growth of Location Intelligence, everyone wants to know where the revenue streams and business models are that will ensure this is not just a trend but here to stay.

Here the opinions of two top executives from Oracle and ESRI, about what is driving the Location Intelligence forward, where the real revenue streams are and what needs to be overcome to get there.

Drivers

Location Intelligence is definitely on the up, but what is specifically driving Location Intelligence forward?

“The geo-spatial market has consistently grown over the last several decades, including through the recent recession.” says SJ Camarata, Director at ESRI, Inc. “Users realize that it provides a valuable, sometimes mission critical capability for them. The fact that Locational Intelligence is in fact an outgrowth of or an extension of the geo-spatial world in and of itself should be a driving factor in leading to successes in the market.”

Xavier Lopez, Director of Spatial & Semantic Technologies at Oracle says “The underlying technologies are now mature – it’s now a matter of integrating them into a service. The delivery of location services is possible when single players can intermediate the necessary technologies and workflows into one service (eg. Google Maps, Apple iPhone, Microsoft, etc.)”

Hindrances

Given that there are so many uses for Location Intelligence, and location data is now integrated in to most business data, there are still certain issues that are holding full progression back.

“In the past with the early attempts of Location Based Services to impact the market, this new movement, 'Location Intelligence', struggles to some extent with trying to move beyond market positioning to real revenue generating business model” Says Camarata.

“The consumer market for the web has been successful to a degree because of its ability to capture revenue through ads. As Location Intelligence becomes more popular and useful, ad revenue models will aid some companies and allow them to gain traction and be successful. Others will need to find a model that will allow them to convince customers that what they offer is worth paying for - whether targeted toward the consumer market, the enterprise market or the areas in between. There are many examples of this and time will tell if new players can find success. Partnerships and cooperative agreements with creative business models may also help as developers and vendors craft useful tools and solutions and couple those with models that allow them to monetize their offerings in ways that scale and generate profitability.”

Camarata is not the only one who is of this opinion. Lopez also agrees on the business model perspective “From a business perspective, a sustainable business model is still problematic. In the technical side, location services, particularly when it involves wireless, has significant dependencies outside of any particular service provider. There is the device which needs to host the application and manage location positioning technology (lat/long). There is the wireless provider that needs to provide accurate location positioning and transmit it. There is the application provider (or mapping service provider) that needs to fuse location, with background mapping and other geocoded data, and with personal preferences.”

“Another potential reason is that Location Intelligence can be viewed as just another 'repositioning' of geo-spatial technology cast under a new name” says Camarata. “Some argue that it connotes less powerful or less analytical capabilities, which may be true, but there should be a way, if the market demands it, for vendors to make revenues and execute smart business plans to become successful. As in any market, it can be difficult to enter a crowded field and distinguish oneself in a way that generates the rapid growth and success desired by many.”

Revenue Streams

The question that remains on everyone’s mind is how and where are the real revenue streams and paths to profit when we’re talking about Location Intelligence?

Lopez is of the opinion that “the opportunities will be in providing targeted enterprise location services that the consumer mapping applications cannot easily deliver. For example applications aimed at vehicle routing and scheduling, indoor positioning, asset tracking, analytics on tracking data.”

Camarata is of the belief that “customers are willing to pay for products/services, whether on mobile devices, the desktop, on servers, on the web or in the cloud, as long as they provide value and solve users problems. Revenue will come from a variety of sources including licensing and maintenance fees, subscriptions, service deployments, professional services (e.g., consulting) and more. Many vendors today are seeing revenue streams coming from each of these (including Esri) and all are growing.”

Wide-scale adoption?

Lopez believes that wide-scale adoption of Location Intelligence will be prevalent in the next 3-5 years….

Marco Santambrogio

Founder and Managing Director

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