It’s Never Been Harder to Make Money in GIS: The Sobering Economic Backdrop to the ESRI/GeoIQ Deal

by Brian Timoney

So ESRI buys the cloud-ish start-up GeoIQ:  why should anyone but the twittering class care?

Because it’s the latest sign there are exactly two pathways to profitability in traditional GIS:  be niche, or be ESRI.  You’ve known for the last couple of years that State & Local budgets are decimated, now that same terrible swift sword is menacing the final redoubts of fat geo profits: Federal defense and homeland security.

So one can log onto and see name-brand contractors chasing sub-$50K work alongside the mom-and-pop shops–fewer dollars and way more hustle and sweat. Or, alternatively, call your buddy at GeoEye and casually ask how things are going.

        Fierce jostling around a trough that's getting smaller


In GeoIQ, ESRI gets a two-fer.  First, with their GeoCommons platform, they bring a lot of proven expertise as to how ArcGIS Online should work.  But more importantly they have sexy buzzword-y stuff (Big Data, Social Sentiment Analysis, Node.js) ready to go.  As the industry heavyweight, ESRI can turn that secret sauce into multiple 8-figure contracts over the next 24-36 months.  As a small startup, GeoIQ could only make a small fraction of that money, as James Fee so bluntly observed.  Nimble and agile are great for innovation, but it takes a peculiar type of heft to deal with the federal government at its most profitable levels (just ask Google).

So where does that leave you?  Developing a domain-expertise niche, teaching yourself Python, or furiously updating your LinkedIn profile?  In a couple of weeks ESRI will have their annual pep rally, for which they have fire-hosed us with some cringe-worthy ad work.  But pay attention to the attendees not going to sessions:  middle- and senior-level people facing college tuitions and the dawning realization that deck chairs are at a premium. Picture beverages, tight smiles, and gallows humor as to how it’s really going out there.

Disruption feels great when it’s happening to someone else’s industry.


—Brian Timoney


* image courtesy of the crazynd Flickr stream