The fortunes of GIS vendors are hostage to the industries they serve, so the ability to change tack fast will always mark successful companies.
MapInfo has weathered the storm in the communications industry in better shape than most observers expected. The company is still losing money, but all the trends are going in the right direction, not least due to the efforts of its executives to redirect the company into safer waters.
As company reports for the last financial year fall into place, there can be little doubt that the debacle in the communications industry in the US hurt MapInfo more than any other company in the industry.
But Mark Cattini, president and chief executive of the company, in Sydney on a whistle-stop tour of Australia, says the tide has turned for his New York-based company.
The quick recovery from what could have been a devastating blow is partly due to cost control, but more, Cattini says, due to diversification.
By any account, MapInfo was horribly exposed to the communications industry; this side of its business amounted to 40 per cent of company revenues at its height. Mostly, this success came from having a product that was ideal for the requirements of communications companies. In the early 1990s, those companies were rolling out massive new infrastructure following the deregulation of the industry.
By the end of that decade, however, the bubble had burst. New markets failed to develop at a rate necessary to sustain the industry, and companies along for the ride, such as MapInfo, began to feel the heat. Its revenue from communications was cut almost in half.
'I don't regret the decision we made to chase the communications industry. It was very good for the company, but there is no point in pretending that the market has not changed radically. The name of the game now is to put in place strategies so we can grow in the current marketplace, as well as plan for the future.'
To that end, MapInfo has reorganised itself into three divisions: analytical customer relationship management, location-based services and location-based intelligence. The aCRM division received a boost recently with the acquisition of Thompson Associates in the US. Cattini says the CRM area in particular will continue to be a strong growth area as its customers work at cutting costs and improving market share.
MapInfo has also begun to invest heavily in location-based services, although Cattini says this market has been disappointing to date. 'It hasn't grown at anything like the rate we expected. However, on the positive side, I think we are doing better than anyone else in the LBS space. We have some good products and we are well positioned to take advantage of improvements to bandwidth and services as the communications carriers provide them.'
MapInfo has established a worldwide partnership with Siemens and Vodafone, two companies with the financial and organisational muscle to make a significant difference on the world scene.
Cattini says his biggest competitor in the LBS space is the French Webraska company. Both Webraska and MapInfo define LBS to mean the delivery of services over mobile phones or PDAs to end users. This puts them at odds with Intergraph and ESRI, both of which are concentrating on mobile workforce enablement.
The choice between consumer and workforce LBS in not an easy one. On the one hand, there can be little doubt that in the long run, the ability to get fractions of a cent from billions of consumers undertaking millions of transactions will transform the fortunes of companies such as MapInfo. The problem is that the communications infrastructure does not yet exist to enable consumer LBS service. There are plenty of embryo services one can point to, but no killer app that every consumer 'must have'.
On the other hand, mobile workforce productivity gains are already possible, and these seem to be driving a reasonable business right now, at least for companies the size of ESRI and Intergraph. One suspects, though, that in the long run there are simply not enough companies in the market, and they won't make enough transactions.
The third area of company business, location-based intelligence -- which includes government services -- is also likely to be a growth area, Cattini says, especially in the US, where government spending motivated by security issues is likely to be a large source of revenue in the near term. MapInfo is already well embedded with police and security agencies. Cattini says that as the sense of urgency in security agencies ramps up, spending decisions will be made faster, and the company will benefit as a result. However, he says there are no plans to introduce new products especially for security agencies.
Although security is likely to be a big winner for MapInfo, Cattini views the economy, which is vulnerable to the vagaries of US foreign policy, with suspicion. Like most businesspeople, he is well aware that his plans could be derailed by an economic slowdown, especially if it hits industries to which the company is exposed.
Mark Cattini was interviewed by Jon Fairall in February.
