Where do GIS users live and work? Where are the producers and sellers of geospatial technology located? Is this market highly concentrated within the United States, or is it widely dispersed? If concentrations exist, where are these concentrations and what are the characteristics of those locations? What kind of people are geospatial professionals? In what kinds of neighborhoods do geospatial vendors locate?

Figure 1. A Daratech study summarized the top nine GIS firms’ market share based on worldwide GIS revenue (software only) in 2001. Revenues from services and data providers, however, may exceed revenue from software sales. (Click to enlarge)

Answers to these questions have regional, national, and global implications. The spatial technology industry is poised to be a $60-$100 billion market within the next decade (Corle 2004). The Office of Management and Budget is working to place a value on the contribution of geospatial technologies to the U.S. economy. The Department of Labor (DoL) has identified spatial technologies as one of three high-growth job markets (Sietzen, Jr. 2004). And according to a recent report titled Geographic Information Systems: Markets and Opportunities 2003, from Daratech Inc., in 2001 GIS software sales drove more than $7.7 billion in total user spending on GIS software and related hardware and services. Of this number, GIS services contributed $5.4 billion, including $5 billion from noncore business vendors/companies that do not develop GIS software products.

Figure 1 shows how Daratech's market study divided up the GIS revenue pie among major GIS producers. Nine GIS firms account for 86 percent of GIS software revenue, but revenues from services and data may exceed revenue from software sales. Moreover, the aggregate incomes of the myriad GIS users within government and industry could likely exceed revenues from other GIS sources.

All these findings indicate that the impact the geospatial industry has on local economies can be substantial. But which geographic regions will be the beneficiaries of this impact? How can support firms and related industries take advantage of this large market?

Table 1. Address-Match Geocoding of Geospatial Solutions’ Subscribers (Click to enlarge)

Can economic development officers, through a better understanding of geospatial market characteristics, turn that understanding into an apparatus for local economic development? Can this information be used to guide regions within national or international locations to economic opportunities arising from geospatial technologies?

Although vast efforts and resources have been allocated to better understanding GIS technology, very few studies have applied the technology to analyze the economic geography of the geospatial community itself so that one may investigate such questions. This month's Shop Talk column, the first in a series of installments about (literally) mapping the geospatial market, lays the groundwork for filling this research gap.

Table 2. Geospatial Solutions’ Readership by State (Click to enlarge)

The Question of Data As with any geospatial analysis, one needs data in order to begin. But obtaining data about the geospatial industry has been notoriously difficult. Where can one get data about the producers and users of GIS and related technologies that is unbiased toward a particular brand of software and representative of the wide range and distribution of applications? Indeed, what do we mean by the geospatial industry? The technologies are used in many disciplines, but is it actually an industry that distinguishes itself?

It has become almost a cliche that the spatial industry consists of hardware, software, data, and the people who create technology and perform analysis, as well as the end users who make decisions based on such analysis (Thrall 2002).

Figure 2. The four types of consumer information that advertisers generally seek (Crispell 1993). GIS provides a tool for obtaining information about where consumers are located, their lifestyle segmentation profiles, and their demographics. For this study, the consumers are geospatial technology users, and the advertisers are firms selling software, data, and related services. (Click to enlarge)

But such a categorization can apply to virtually any information technology. Purvi Rajani (2002), when addressing which products and companies should be considered "geospatial" and which should not, asked if it was fair to compare MapInfo of Troy, New York, with Genasys II of Fort Collins, Colorado. Are these two companies really in the same industry?

Valerie L. Hartung (1997) in her analysis of the geospatial industry concluded that the fast-growing characteristics of the market make it a difficult industry to research and define. Hartung sampled 300 firms from the United States and 84 from Canada that she believed to be representative of the production side of GIS. She concluded that one third of known GIS firms are located in the Colorado corridor, Washington, D.C., beltway, and Los Angeles metropolitan area, and that the largest markets for spatial intelligence technology are utility companies and all levels of government.

But are her 300 firms a good representation of the breadth and depth of geospatial penetration in the United States? What about elsewhere in the world?

To give us better insight into the makeup of the geospatial industry, we turned directly to the people that make up the community -- namely Geospatial Solutions' readership. The magazine has nearly 30,000 subscribers and maintains a list of spatial firms. In addition to being part of the geographic technology industries, Geospatial Solutions is also part of the $24 billion magazine publishing market. Advertising pays for the creation and distribution of Geospatial Solutions. Advertisers in magazines want to know what kind of people the publication is reaching (see Figure 2 for an overview of the general consumer information that advertisers generally need -- information that is best handled with GIS), and Geospatial Solutions' staff desire to learn how they can better serve their readership.

Figure 3. Generated from Geospatial Solutions’ subscription database, this point map shows the distribution of the magazine’s readership and, by corollary, geospatial technology users within the United States. (Click to enlarge)

It should be noted that although the case for and value of analyzing Geospatial Solutions' readership is strong, revealing the results in a series of articles is unprecedented in both the geospatial and magazine industries. Advanstar, the parent company of Geospatial Solutions, agreed to give us access to the magazine's proprietary databases -- the true treasure of the publication. They also agreed that results could be shared with the geospatial community through this publication. Never before have we had the ability to look so deeply and clearly into ourselves as an industry.

A Geospatial Market Map For this analysis, the staff at Geospatial Solutions sent us the publication's database of 26,024 "audited" subscribers. Geospatial Solutions is the only professional publication in the spatial industry whose subscription list has been continually audited since it was founded in 1990. An independent firm executes the audit. The auditors periodically review the database for accuracy and authenticity, within a sampling error. In addition, it should be noted that in 2001 a separate independent firm found that the magazine had an average pass-along rate of 6.2 people (a measure that attempts to account for the fact that many agencies will route magazines around the office for coworkers to read). This means that the number of subscribers is actually representative of a much larger user base. But, because we did not have data about how this pass-along rate differs across geographies, we assumed it to be constant for all areas and did not factor it into our analysis.

We used geocoding software from ESRI to assign geographic coordinates and lifestyle segmentation profiles (LSPs). (Since we began our analysis, ESRI changed the name of the geocoding product we used from CACI Coder/Plus to Community Coder, and its LSPs from ACORN [A Classification of Residential Neighborhoods] to Tapestry.) Table 1 shows the results of the address-match geocoding: 73.4 percent of the subscriber records geocoded at the street-address level, and most of the remaining data geocoded to the five-digit ZIP Code level.

After geocoding, we imported the Geospatial Solutions' readership database into ESRI's ArcGIS 8 as a point file. Figure 3 shows the resulting map, which one might hypothesize shows a strong correlation between the distribution of magazine readership and concentrations of the general U.S. population.

Figure 4. This thematic map shows the percentage of Geospatial Solutions’ readership in each state. Based on those percentages, states were designated as primary (above 5 percent), secondary (between 2 and 5 percent), or tertiary (below 2 percent) markets. (Click to enlarge)

Analyzing these data further, Table 2 shows the results of a GIS point-in-polygon operation that allowed us to calculate readership by state. The most populous states are at the head of the table and have the largest percentages of Geospatial Solutions' readership. However, the relationship is not one-to-one -- California, for example, represents more than twice the readership of New York.

Figure 4 displays the calculations of the third column of Table 2 as a thematic map. We partitioned the percentage distribution of Geospatial Solutions' readership into three categories: primary (above 5 percent), secondary (between 2 and 5 percent), and tertiary (below 2 percent). Although these percentages can be viewed as arbitrary, they make it easier to distinguish which states are most important to Geospatial Solutions and, hence, the spatial industry. California, Texas, and Florida constitute the primary geospatial market according to our categories.