Monday, April 2. 2007

Is IBM the Next Major GIS Player?

In answer to my own question, I think it is possible. Some facts: In today's Wall Street Journal, an article entitled "How an IBM Lifer Built a Software Unit Into a Rising Star," profiled Steve Mills, a long-term IBM employee and one of only two senior executives not to be "replaced or moved" during the Sam Palmisano era. His unit, which is responsible for WebSphere, had $18.2 billion in revenues in 2006, making it second only to Microsoft in software sales. Since 2000, Mills' unit has acquired mostly smaller companies with "unique products that can grow faster when sold by IBM's giant sales force." That last point is key and that most acquisitions Mills' has made has not exceeded $2.1 billion, an interesting number when you consider some of the remaining GIS companies that are now private: Intergraph and ESRI for example. Even though Intergraph was just recently acquired, I think Texas Pacific will eventually split the company as the parts are more lucrative than the whole. And ESRI, though Mr. Dangermond shows no signs of retirement, could make an interesting acquisition given the long-standing ESRI-IBM partnership.

Also consider this, both SAP and GE have now made some noise in the geospatial marketplace and CH2M HILL, a large systems integration/engineering firm, has as well. Could IBM be far behind? It's a big question since IBM indeed has geospatial software solutions already but have just never put it all together under a cohesive unit (see also DB2 Spatial Extender). I think the awareness generated by the large companies mentioned above make it irresistable for them not to enter or "re-enter" soon. When I heard that Intergraph was acquired last year and then MapInfo just recently, IBM was on my list both times. It was a "double" missed opportunity for big blue both times.

Comments

Display comments as (Linear | Threaded)

Interesting thoughts.

Given the commoditization of a large portion of bread and butter geospatial functionality, IBM might be better-off concentrating their funds/effort on open source geospatial projects.

With their involvement, projects like QGIS, MapGuide, GRASS, and others could quickly exceed the capabilities and polish of proprietary solutions in these areas.

Heck, they could start to get involved in MapGuide for as little effort as writing an FDO provider for DB2.

Jason

#1 Jason Birch (Link) on 2007-04-02 18:32 (Reply)

Joe:

I think a relevant question is whether traditional desktop GIS is a slice of the geospatial market that's worth paying a premium price for.

If I'm IBM, I think of ways to deliver high-quality end user experiences that happen to have a spatial component with my existing data storage/data visualization stack. In other words, juice up the geospatial analytics and presentation of WebSphere. As Jason points out, there are all sorts of options for performing the behind-the-scenes GIS-y heavy lifting that would require zero investment in a proprietary vendor. And already having a robust spatial database component in place, makes an acquisition less urgent.

I guess this is a round-about way of saying that the future we all agree is coming--GIS-as-Service, Geospatial-Fully-Integrated-Into-The-IT stack, whatever you want to call it--may end up shrinking the margins of what have traditionally been very lucrative desktop software profit centers.

But maybe the real value is in federal government contracts. Take over ESRI's presence at the federal level, and who would be able compete against IBM for the massive geospatial projects of the future????


Brian

#2 Brian Timoney (Link) on 2007-04-02 20:40 (Reply)

My guess agrees with your guess -- the federal contracts are the real moneymaker for ESRI and for potential acquisitors.

#2.1 Atanas Entchev (Link) on 2007-04-03 06:34 (Reply)

Add Comment

Name
Email
Homepage
In reply to	[ Top level ]#1: Jason Birch on 2007-04-02 18:32 #2: Brian Timoney on 2007-04-02 20:40   #2.1: Atanas Entchev on 2007-04-03 06:34
Comment	Enclosing asterisks marks text as bold (*word*), underscore are made via _word_. Standard emoticons like :-) and ;-) are converted to images. E-Mail addresses will not be displayed and will only be used for E-Mail notifications To prevent automated Bots from commentspamming, please enter the string you see in the image below in the appropriate input box. Your comment will only be submitted if the strings match. Please ensure that your browser supports and accepts cookies, or your comment cannot be verified correctly. Enter the string from the spam-prevention image above:
	Remember Information?   Subscribe to this entry