Space is not just entitled to technology and research for building space crafts and rockets that can carry humans to other planets. The sector is more than that; it entails business analysis, financial strategies, policies, investments, and much more. Today, space has become a hot topic in the business world. The sector can provide solutions to almost all the sectors, from your farm to your banks.
Following this, demystifying the space industry is one of the key things to understand its promise in different markets. And who else can provide a better solution than a spacetech stakeholder itself? And that’s where SatSure has entered with its indigenous Space Jam series, to help demystify everything related to the space sector with folks from around the world.
The first episode of the Space Jam series, titled ‘Satellite Earth Observation: An Industry in Transformation’, focused on the critical aspects of the industry and its evolution through the years. The speakers were Narayan Prasad, COO, SatSearch, Aravind Ravichandran, Founder, Terra Watch Space & Director of Strategy, Space at Tomorrow.io, and Prateep Basu, Founder, SatSure. Krishna Reddy, Jr. Innovation Officer, Space, and Technology, Netherlands Government, moderated this session held on 21 May, 2021.
Understanding the end consumers of satellite data operators
Go on your browser and type space industry. Most likely, you will see a list of names of spacetech companies providing a range of space-oriented solutions. But you would hardly see a clear list of customers availing of those services, besides the primary customers, the government, and defense forces.
Why? And who are these other customers for which the space companies are planning to launch over 7,000 smallsats in the next five years? It just can’t be the government alone. There are other significant numbers of private customers. On this, Aravind said,
“From a commercial point of view, there is starting to be a lot more data available than ever before. It’s a good question because the biggest customer so far has been Defense and Intelligence, and that’s kind of what’s been the anchor customer for the earth observation industry. “
He later added, “The second traditional consumer is Agriculture because they have been using it more from a scientific standpoint for many years. Now, with commercial data with higher resolution and with higher frequency. They have started to make use of it.”
For decades it was Sentinel, Copernicus program, and Landsat that were leading on the commercial front. It is now that the sector is seeing a disruption by new players, which are offering analytical and data processing-oriented solutions.
Another uncharted sector in India is the agriculture banking part, which SatSure has penetrated to an extent. Following this, banking is the major puller because one is essentially catering to a vast volume of people. It also falls within the impact space, you know, financial inclusion!
Prateep said, “How do you do the credit assessment and remote monitoring of your portfolio? We see banks becoming a stickier customer than insurance, that again, from my experience. Both sectors together do constitute a good counter, not counterbalance but a good alternative to selling.”
Data management and analyzing – the need of the market
There are multiple ways to manage data but the core thing is to store data and it completely depends on what type of models we are running. Satellite data is available in the market but not in easily consumable form. In short, one still needs an expert to crunch the data down to access the required information. In contrast, one would assume that anyone can understand the data.
For instance, solutions like disaster-related crop damage assessment and models must be built to provide specific services within the insurance value chain. It is to estimate the percentage of damage related to the lost share associated with the actual claim.
Prateep adds, “There are a lot of other analytical models and process automation that has to come in. There is a lot of process automation that has to come in and I see this evolving in the downstream space as also more and more supply comes in, because when you are looking at some specific kind of issues which are covered in insurer like DC Broadcast related damage, you have to do analysis using bands that are not available so as more Hyper- spectral data goes up or more and more receptivity of the data improves both from optical answer. I think there is a demand, supply meets a demand story coming soon in insurance.”
Narayan Prasad added some staggering numbers to this argument, “according to a report, ESA said that less than 1% of satellite imagery captured right now is commercially utilized, like including all the open data and everything else that was surveyed some time back”.
Further, Narayan added that if we look from market side then initially there are a few customers which we are targeting and make solutions but this way we constraint the size of company because we can export data in commercial markets but for achieving this scale there are certain challenges for which we need certain different approaches.
While talking on the commercialization of satellite data and its applications in different industries, Aravind went on to add that go-to-market strategies completely changes with industry to industry and the major factors responsible for this is how digitalized is that industry and how we present it to different customers because customers are not aware of using satellite imagery. Hence, presenting how our solutions are valuable to them becomes more important.
Understanding your solution provider in space
Most of us are inclined to a specific brand when choosing a smartphone, then comes the part where we look at what the device has to offer. In short, most people today buy a brand and not a product. But what about in space? A sector where one wouldn’t know beyond a certain Elon Musk.
Unlike the usual trends, Aravind elaborated, “if you explain to a customer that this is SAR, this is Optical, and this is Hyperspectral, they won’t understand because they are two levels behind. They need first to understand the earth observation and the whole space component. The second layer is the remote sensing component. What is Hyperspectral? What band should I use? These are all things only a few customers who have been using earth observation historically.”
Also, the customer needs to know more about the product, even if one knows where to buy it. There is a whole bank of knowledge one has to educate oneself to make a simple purchase.
Narayan quipped in, “saying that you’re getting like X Gigabyte of data at X speed and voice connectivity and roaming or whatever right. So, just looking at that as value for you. It’s similar to that. I think it only gets more complicated if you vertically integrate.”
Defense and government are those customers who are well versed with what an ounce of a solution can bring in. For instance, primarily defense customers want the variety in satellite datasets. Not just the velocity and volume, but they also want to know whose pixel gives the best picture and what the best delivery time you can give.
“If you move out from the defense customer space, it’s a blank slate. Again, people are not suddenly speaking from a sensor and revisit rate point of view. All these parameters are like a moot point.” said Prateep.
The offspring of the EO industry – The independent developers
A decade ago, the internet was a niche space in India and other developing economies. Only a section of the population with the privilege of internet and smartphone would have access to it. Now, it has changed. Reason? Affordable internet and budget smartphones, and result? We have seen a surge in independent content creators, app developers, and many more, making the whole business a multi-billion-dollar business.
So, how will it appear in the EO industry? Well, Arvind weighs and said by taking example of iPhone, that initially idea of iPhone was there and later developers created different applications for it. So in a same way, it’s not possible to have independent developers in Earth observation industry in the short term like next 2-3 years because we are still in the development stage. He said “I can imagine a world where we’ll reach a point where people will not differentiate based on data anymore. You offer SAR, optical, for thermal infrared 10 centimeters, 20 centimeters, 30 centimeters probably in the next three to five years. We’ll reach a point where we’ll have the satellites onboard which have all the types of data, and then we can start thinking about what to do with it.”
The bridge between a product and its success is sales. Most of us interested in buying an iPhone would hardly know the hardware, the programming, and the whole mechanism the product entails. But it’s easier to sell a product like the iPhone by showing to its users features that would attract them and meet their social requirements. What happens when your product itself is a programming product, or a script, maybe an algorithm? Then you need to be an expert in sales, or your customer needs to know beforehand and find you to buy the product before you see him.
Prateep jumped in here adding, “I have figured out that SatSure could very well be five different companies put together, that’s the complexity of the work that we are doing because we are constructing an entirely new industry. It’s going to have multiple iPhone moments, multiple, not one!”
Another thing which is very important while talking about the future of Earth observation (EO) industry that EO data can become the core part of digital transformation strategy for any government or organization and this industry itself is in the transformation phase, with possibilities of a future where there will be a highly competitive market. While talking about the key challenges in using EO data, defense players are the big buyers because they know how to utilize that data but in the other sectors people are still undergoing training of how to imbibe AI and DT (digital transformation) as part of their strategy for impacting their organization’s top-line and bottom-line.
As we try and unravel the industry, it seems similar to opening a pandoras box. You just can’t entail all the aspects in a single short description. It’s because the industry is growing and expanding that fast. Several countries are yet to enter the digital service-oriented era, which means a compelling case lies there. With the knowledge of employing satellite data, one can utilize it in the initial stages and skip the evolution part which other nations went through from 1G to 5G and jump straight to the front.
Space industry comprises of high risks from the beginning and that’s why investors hesitate to invest because chances are always 50-50 and the growth of space industry depends a lot on the other industries.
On this, Narayan said that risks are there but in the end things can change if we stop looking at space industry alone because it constraints our vision and if we make space industry as a part of cumulative growth for a country or as a part of overall economy it will grow exponentially.
Adding on to this, Aravind said that its very difficult for investors to connect because the gap is still very high and also once satellite reaches orbits that’s great but then what happens after the satellite is sent up it’s still not figured out and investors also need to care about this part. While today there are quite a few investors aware of the space industry, but hardly there are many investors who are aware of the earth observation companies which are linking space industry to other industries like Agriculture, financial services, energy, or sustainability.
This article was originally published in The SatSure Newsletter [TSNL]