Earth Observation Technologies: Low-End-Market Disruptive Innovation

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For more information visit www.intechopen.com Open access books available Countries delivered to Contributors from top 500 universities International authors and editors Our authors are among the most cited scientists Downloads We are IntechOpen,the world’s leading publisher ofOpen Access booksBuilt by scientists, for scientists 12.2% 119,000 135M TOP 1% 154 4,600 1 Chapter Earth Observation Technologies: Low-End-Market Disruptive Innovation SilviaRodriguez-Donaire, MiquelSureda, DanielGarcia-Almiñana, EloiSierra, Jose S.Perez, Peter C.E.Roberts, JonathanBecedas, Georg H.Herdrich, DhirenKataria, RonaldOutlaw, LeonardoGhizoni, RachelVillain, AlexisConte, BadiaBelkouchi, KateSmith, SteveEdmondson, SarahHaigh, Nicholas H.Crisp, Vitor T.A.Oiko, Rachel E.Lyons, Stephen D.Worral, SabrinaLivadiotti, ClaireHuyton, Luciana A.Sinpetru, Rosa M.Domínguez, DavidGonzález, FrancescoRomano, Yung-AnChan, AdamBoxberger, StefanosFasoulas, ConstantinTraub, VictorJungnell, KristianBay, JonasMorsbøl, AmeliSchwalber and BarbaraHeißerer Abstract After decades of traditional space businesses, the space paradigm is changing. New approaches to more efficient missions in terms of costs, design, and manufacturing processes are fostered. For instance, placing big constellations of microand nano-satellites in Low Earth Orbit and Very Low Earth Orbit (LEO and VLEO) enables the space community to obtain a huge amount of data in near real-time with an unprecedented temporal resolution. Beyond technology innovations, other drivers promote innovation in the space sector like the increasing demand for Earth Observation (EO) data by the commercial sector. Perez etal. stated that the EO industry is the second market in terms of operative satellites (661units), microand nano-satellites being the higher share of them (61%). Technological and market drivers encourage the emergence of new start-ups in the space environment like Skybox, OneWeb, Telesat, Planet, and OpenCosmos, among others, with novel business models that change the accessibility, affordability, ownership, and commercialization of space products and services. This chapter shows some results of the H2020 DISCOVERER (DISruptive teChnOlogies for VERy low Earth oRbit platforms) Project and focuses on understanding how microand nano-satellites have been disrupting the EO market in front of traditional platforms. Satellites and Innovative Technology 2 Figure 1. Microand nano-satellites launched between 1997 and 2017, classified by sectors (own elaboration). Keywords: disruptive innovation, low-end market, microand nano-satellites, new space, Earth Observation 1. Introduction Although Earth Observation (EO) started as an activity exclusively affordable for governments or big players in space with vast financial resources to sustain expensive programmes, it is no longer an exclusive and expensive industry. It allows the emergence of start-ups and spin-offs from academia and emerging countries that are the foundations of the New Space. This phenomenon, known as the democratization of space, changes the accessibility, affordability, and commercialization of space products and services to companies of all types and sizes [1]. According to [2], New Space can be understood as a disruptive trend whose aim is to transform space into a commodity by taking advantage from the joint between Information Technology (IT) and EO.Even though its origins were in Silicon Valley, the trend is now extended worldwide. Regarding the Union of Concerned Scientists (UCS) satellite database, 1980 operational satellites were orbiting the Earth at the end of April 2018, with 684 of these aimed to EO [3]. This represents a growth of 250% compared to January 2014, when there were only 192 active EO satellites. From this huge increase, it is clear that EO data acquisition is an emerging market. With the number of companies growing year-by-year and optimistic forecasts, it can be reinforced that “EO is on its earlier days and there are still a lot of improvements to do and problems to solve” [4]. Looking at the new EO-based markets, it is observed in [2, 5] some signs of potential disruptive innovation in the space sector. Some technological drivers promote this innovation. For instance, low cost access to earth imagery; availability of high-quality spatial, spectral and temporal imagery; innovations in 3 Earth Observation Technologies: Low-End-Market Disruptive Innovation DOI: http://dx.doi.org/10.5772/intechopen.90923 computer science, like cloud computing and machine learning; and some specific programmes, like Copernicus, that transfer high technology development from governmental programmes to other industries and services. Beyond technological drivers, other drivers promote the disruptive innovation in the space sector, such as the sharing economy, the increasing demand of the commercial sector—like smart cities—and the government interests in environmental monitoring. For example, Spaceflight offers companies a global launching opportunity, working with almost every launch vehicle provider on the planet. All of these drivers encourage new companies—like Skybox, SpaceX, OneWeb, Telesat, Planet, and OpenCosmos, among others—to develop new business models that make space more accessible and affordable for nongovernmental organizations on shorter periods. Figure 1 summarizes the total number of microand nano-satellites launched per year between 2001 and 2017. Micro-satellites are loosely defined as any satellite weighting between 10 and 100kg, while nano-satellites weight less than 10kg. They have been classified by sectors to emphasize the huge increase of commercial microand nano-satellites launched in recent years compared to those launched by defense departments and governments. 2. Hypotheses: disruption in EO technologies The term disruptive innovation was popularized in 2003 by Clayton M.Christensen, professor at Harvard Business School. In [6], he distinguished between sustaining and disruptive technologies and later, in [7], it replaced the term technology with innovation, since disruption does not come from technology but from businesses. According to [7], sustaining innovations foster improved product performance, while disruptive innovations bring to the market a very different value proposition, with a performance that is initially below the mainstream products, but with low prices or unique features that compensate for it. Additionally, in [6], a distinction between low-end-market and new-market innovations is made. Low-end-market innovations are those that do not result in Factors affecting innovation Space situation Challenging objectives and attractive environments (+) Space missions remain technically very challenging and their components and technologies are still one-off prototypes, custom-designed, and optimized for specific missions Closed sector (−)Space is a closed sector with little exchange of resources outside of aerospace and defense. However, innovations, especially the disruptive ones, appear from the intersection of domains and disciplines Risk adversity (−)Space activities are high-risk efforts and they do not offer opportunities for error corrections after launch. This leaves little freedom for innovation and leads to a risk-averse culture Highly skilled workforce (+) Space workforce is highly educated and mobile and has a diverse cultural background High entrance barriers and open competitive markets (−) Without open competitive markets, space innovations are likely considered useless for businesses. Additionally, high entry barriers and huge launching costs reduce the stimuli of industrial and private sectors to invest in space innovations Table 1. Factors affecting space innovation [5]. Satellites and Innovative Technology 4 better product performance but offer lower prices, such as Walmart and its cheap retailing malls. On the other hand, new-market innovations, like the iPod, serve new users who had not owned or used the previous generation of products. Christensen approached disruptive innovations from the point of view of both management and industry. However, his recommendations are kept at industrial level. Despite his product performance and business strategy analysis, his definition does not identify the innovation characteristics, since they are intrinsic rather than external factors that change over time, like customer perception or government regulations. In [5], the concept of innovation is applied to the space environment. The author stated that some factors would affect the likelihood of innovation within the European space sector. Table 1 summarizes these factors, dividing them between those that promote space innovation (+) and those that prevent it (−). In [8], the previous concept of disruptive innovation is refined by identifying three innovation characteristics: functionality, discontinuous technical standards, and ownership models. His definition broadens the meaning of low-end market and new market innovations. Taking the above signs of innovation in the space sector and following the strategy developed in [7, 8], recent microand nano-satellite EO missions seem to show the key characteristics of disruptive innovation. Table 2 summarizes the characteristics of microand nano-satellites as disruptive innovations according to different authors. By combining the above-presented characteristics of disruptive microand nano-satellite innovations with the main specificities of the EO space market, a set of six hypotheses for microand nano-space market disruption has been developed Characteristics of disruptive innovations Christensen and Raynor [7] Summerer [5] Nagy et al. [8] Denis et al. [2] High level of risk Discontinuous technical standards (simplicity) Accessibility Enabling new market opportunities Inferior performance Performance improvement Disruptive functionality Affordability Forms of ownership Table 2. Characteristics of microand nano-satellites as disruptive innovation in space [2, 5, 7, 8]. Low-end market innovations are those with discontinuous technical standards that disrupt markets by using new, less costly materials or new production processes in the creation of existing technologies [9, 10] or new forms of ownership. These forms dictate how innovations are received in a marketplace, as they establish prices and innovation-related services among others [11]. New-market innovations are those with a disruptive functionality that provides the user with the ability to undertake a new behavior or accomplish a new task that was impossible before [12–14]. 5 Earth Observation Technologies: Low-End-Market Disruptive Innovation DOI: http://dx.doi.org/10.5772/intechopen.90923 and presented in Table 3. In this section, all mentioned characteristics are tested to verify if the authors’ hypotheses are true in order to clarify whether microand nano-satellites are disruptive for the EO market. 3. Analysis: disruption in EO technologies In this section, the analysis of the six hypotheses stated in Table 3 for microand nano-space market disruption has been done. The first hypothesis is related to space market standardization, the second hypothesis is related to market opportunities, the third hypothesis is related to microand nano-satellite performance, the fourth hypothesis is related to the affordability of the new space technologies for EO, the fifth hypothesis is related to the forms of ownership and operability of EO systems, and finally, the sixth hypothesis is related to disruptive functionalities that provide novel products. 3.1 Hypothesis 1: microand nano-satellite simplicity and standardization In mainstream space platforms, each of design, development, and test campaign tends to be almost unique, custom-made for the specific mission. Long project Characteristics of disruptive innovations Hypothesis to test Hypothesis label Standardization The space sector has a low level of risk acceptance, which leaves little freedom for innovation. However, microand nanosatellites provide simplicity and standardization in terms of design and manufacturing, This leads to a higher level of risk acceptance and, consequently, more innovation 1 New market opportunities Data accessibility and technology standardization are essential conditions to open new market opportunities 2 Performance Microand nano-satellites improve their performance in a pace that meets market needs even though they have an inferior performance than those of traditional EO spacecraft 3 Affordability Traditional, established space companies are ignoring the market due to very low-profit margins. This fact leaves room for new entrants with totally different business models. These new actors bet on low-cost technology to produce more affordable space systems for Earth Observation 4 Ownership forms Recent evolutions in microand nano-satellite technologies are affecting the forms of ownership and operability of EO systems, which were formerly owned by governments or public organizations 5 Disruptive functionality Microand nano-satellite missions offer disruptive functionalities that provide novel products or services that were unthinkable or impossible with traditional spacecraft missions 6 Table 3. Summary of studied hypothesis related to the disruptive innovation characteristics. H1: The space sector has a low level of risk acceptance, which leaves little freedom for innovation. However, microand nano-satellites provide simplicity and standardization in terms of design and manufacturing. This leads to a higher level of risk acceptance and, consequently, more innovation. Satellites and Innovative Technology 6 durations and high costs are consequences of the complexity that implies the need of guaranteeing the maximum quality, hence the minimum risk for the mission. On the other hand, microand nano-satellite constellations are based on the concept of standardization, which opens up the possibility of using commercial electronic components and the choice of numerous technology suppliers. In that way, it is possible to create less expensive satellites in shorter periods. Depending on the specifications, a micro-satellite can be built and placed in orbit for a few million euros and a nano-satellite for almost a quarter million. In comparison, the cost of a large satellite can rise to 500million euros [4, 15]. Apart from the cost and size, the main benefit of microand nano-satellites is the time required to design and implement each model. As an average, a microor a nano-satellite can be designed, manufactured, and launched within less than 2years [4, 15]. This means that large constellations of small satellites can be regularly renewed with state-of-the-art systems, ensuring optimal performance even if some units are lost or fail. This is not the case of conventional satellites, which are developed and launched within expensive and long projects that last between 5 and 10years and, accordingly, cannot afford any failure in the platform without risking the entire mission. Particularly worthy of mention is the recent emergence of many dedicated micro-launchers designed to place small satellites in orbit. So far, microand nano-satellites are launched at marginal costs as “piggyback” payload alongside traditional spacecraft. However, new micro-launcher concepts may be responsible for providing simplicity and standardization to the whole process, lowering launch costs if they demonstrate reliability and good performance [1]. For the stated reasons, H1 can be supported, since microand nano-satellite design and manufacturing is focused on simple and standard equipment that eventually may increase the linked risk acceptance. 3.2 Hypothesis 2: new market opportunities EO is a promising, fast-growing field boosted by a wide range of applications across various economic sectors, including precision farming, natural resource monitoring, oil and gas exploration, meteorology, civil protection, insurance, and urban monitoring [1]. The emergence of low-cost microand nano-satellites enabled EO start-ups to attract new markets interested in their tremendous amount of accessible and affordable high-resolution images. Additionally, more and more countries invest in their EO capacity, confirming the soft power dimension of space but also opening new market opportunities for international or regional cooperation [1]. Not only space is becoming more accessible through new launch technology, but also data from programs like US Landsat and Europe’s Sentinel program are already available to all. This allows third parties to develop new services and applications over high-quality databases supported by different funding programs. For instance, OneAtlas updated the base map of the whole world with high-resolution imagery without taking any picture or OneWeb plan to use small spacecraft technology to make satellite Internet available on a global scale. It is clear that some of these new markets are recently gaining access to EO data because it is cheaper than before. However, a very important entry barrier was also the traditional space companies themselves, because data owned and controlled by defense and public organizations were not available at any price. H2: Data accessibility and technology standardization are essential conditions to open new market opportunities. 7 Earth Observation Technologies: Low-End-Market Disruptive Innovation DOI: http://dx.doi.org/10.5772/intechopen.90923 In Figure 2, it can be seen that in the year 2017, defense represented more than 60% of the commercial data market ($1.8billion), with infrastructure and natural resources verticals accounting a similar share to each other. These three vertical markets represented 80% of the commercial data market in 2017. Looking to the future, Euroconsult forecasts that the market for commercial EO data is expected to reach $3billion (5% of the Compound Annual Growth Rate (CAGR)) in 2026 [1]. In the short term, growth is expected to continue to be driven by the defense, with ongoing regional unrest and growing Image Intelligence needs of countries without proprietary military systems. By 2026, the defense is expected to represent 46% of the total market value ($1.7billion). Therefore, although defense will continue to be the major client for EO imagery, their share will reduce in the coming years. Other applications, such as maritime, infrastructure, and resource monitoring will support growth in the long term. Together with defense, these applications should have a 5% CAGR through 2026. Emerging applications in these sectors such as critical infrastructure monitoring and precision agriculture benefit from more capable satellite systems (i.e., a combination of higher ground resolution with higher temporal resolution). Location-Based Services (LBS) applications, including financial and insurance services, have been slow to develop, but the longer-term outlook for these services remains positive with the availability of new satellite capacity. For LBS applications, greater emphasis is expected to be put on integrated product offerings, emphasizing requiring the development of change detection analytics. In terms of revenue generation by data type, VHR optical is expected to remain the most significant in terms of data sales. More moderate-resolution datasets will be challenged by the availability of free solutions and low-cost systems offering comparable data. According to [1], in 2016, the market for Value-Added Services (VAS) was $3.5billion. This discounts the purchase of commercial data to develop geospatial solutions. Key markets for VAS do not mirror those for commercial data sales. Defense, while representing 61% of the commercial data market, only represents 15% of the VAS market; conversely, infrastructure and engineering (which incorporated cartography, cadastre, etc.) is only 10% of the commercial data market but 33% of the value-added market. According to [1], the reasoning for this is relatively straightforward: defense end-users purchase data with much value-added analytics performed in-house. On the other hand, lower-cost, coarser resolution, and lower geolocation accuracy data can be leveraged with value-adding to form greater value products and services. Environmentmonitoring users, for instance, procure limited commercial data but are developing Figure 2. Commercial EO data market in 2017 (left) and value-added services market in 2017 (right) [1]. Satellites and Innovative Technology 8 solutions using scientific and coarse resolution data, for example, pollution/aerosol monitoring and climate modeling. Many infrastructure applications for mapping also can be developed by using Landsat and Sentinel data that are free of charge. In [1], it is also forecast that data also add to the belief that by making coarserresolution data free, the value-added services industry can leverage this to build greater value services with the potential for two very different businesses: a “highend” data market to support defense and free/low-cost data sources to support commercial and civil government applications. For these reasons, H2 would also be supported, since new market opportunities are growing and standardization has been proven as H1. 3.3 Hypothesis 3: microand nano-satellites performance EO optical imaging satellite performance is defined in terms of spatial and temporal resolution. Spatial resolution relates to the level of detail obtained from an image and can be measured by the Ground Sample Distance (GSD), which is the distance between adjacent pixel centers measured on the ground. Figure 3 shows the evolution of EO microand nano-satellite GSD in the last 20years. The solid lines depict how the concepts of Medium Resolution (MR), High Resolution (HR), and Very High Resolution (VHR) evolved through time. While MR has maintained constant around 15m, HR and VHR have decreased to 2 and 0.3m, respectively. Dots in Figure 3 represent GSD values for the EO microand nano-satellites analyzed in this research (see Appendix A for details on the data analysis methodology). Cross marks prove that between 1999 and 2013 governmental and defense were almost the only microand nano-satellites devoted to obtaining HR and VHR images of the earth. However, 2013 marks a turning point in the EO market, with Figure 3. Evolution of EO satellite GSD during the period 1999–2018 (own elaboration). H3: Microand nano-satellites improve their performance in a pace that meets EO market needs despite having an inferior performance than those of traditional EO spacecraft. 15 Earth Observation Technologies: Low-End-Market Disruptive Innovation DOI: http://dx.doi.org/10.5772/intechopen.90923 References [1] Perez S etal. Prospects of Earth Observation Overview. Euroconsult. DISCOVERER H2020 Deliverable; 2018 [2] Denis G, Claverie A, Pasco X, Darnis J, de Maupeou B, Lafaye M, etal. Towards disruptions in Earth observation? New Earth Observation systems and markets evolution: Possible scenarios and impacts. Acta Astronautica. 2017;137:415-433. DOI: 10.1016/j.actaastro.2017.04.034 [3] UCS Satellite Database [Internet]. Union of Concerned Scientists. 2019. Available from: https://www.ucsusa. org/nuclear-weapons/space-weapons/ satellite-database [Accessed: 13 May 2019] [4] Kramer H.Observation of the Earth and Its Environment. 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