A tale of two cities
While the merger of these two companies is well covered by the press, let me tell you a story from the perspective of a Canadian trying to do earth-observation (EO) business in the US with Axion Spatial Imaging 30 years ago with then-Defense Mapping Agency in St Louis (now National Geospatial Agency in Washington), and then 10–15 years ago managing an industry sector for Esri whose largest client in NGA. I have since kept abreast of EO via my professional friend and EO expert Andrew Cutts.
MDA is a Canadian firm based in the greater Vancouver area, renown since 1969 for is remote sensing applications and services, as well as space tech such as the CanadArms in the Space Shuttle and CanadArm2 in International Space Station. DigitalGlobe from the greater San Francisco area was seen as a disruptor (though that term didn’t exist in 1992) bringing various hi-res remote sensing satellites (aka. birds) shaking up the LANDSAT and SPOT duo from US and France, respectively. At Axion I contracted with Fujitsu Supercomputing to process SPOT image stereo-pairs into digital elevation models and presented it to Canadian and US agencies way ahead of its time.
Today however sees a second wave of disruption:
- there are cheaper and smaller satellites that ware completely changing the game like DigitalGlobe did 25 years ago, as written up on this channel
- there is a tide-change in satellite imagery delivery via the internet — previous ftp and disk delivery was mandated by the very large size of satellite imagery files — as seen in Andrew Cutts excellent coverage here
This created then a predictable shake-up of the EO industry, and MDA basically assumed DigitalGlobe’s $1.2B debt. But why would they do that?
Amazon recently acquired Whole Foods and also assumed its $13B debt — in the belief that latter would help the former into the grocery chain business — note however that the operations are kept apart.
The MDA tie-up is a little more complex, as it’s between a CDN and a US company, in a market dominated by US government business to which a foreign company isn’t privy. I found that out at Axion from Western Canada.
When I was at Esri over a decade later, I managed oil&gas majors and service companies with offices worldwide. Esri had only US offices in order to meet requirements of the Government Accountability Office, and operated overseas via international distributors — that made it tricky to match up foreign offices of petroleum operators or service companies with separate Esri distributors — indeed my time was split evenly among oil majors, business partners and international distributors in decreasing order of revenue for Esri.
MDA’s way to get a toe-hold in the lucrative US market, was to:
- acquire a debt-ridden DigitalGlobe, whose business model and technical capacity were well aligned
- keep the Canadian and US entities separate like Amazon did withe their Whole Foods purchase
- presto! US-based SSL MDA Holdings contracts with the US government to offer the combine technology
Taking off from the Texas two-step above, is this not a two-step process to extend a Canadian company’s ambitions south of 49*, while saving an American company in a market shake-down?
*: refers to most US states south of the 49th parallel, which is the largest section of the US -Canada border
