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DIGITALGLOBE INC

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DigitalGlobe Cleared to Sell Sharper Images

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06/11/2014 | 03:15pm EDT

DigitalGlobe Inc. on Wednesday secured approval from U.S. regulators to sell satellite images of objects as small as a shoebox to overseas and commercial clients for the first time as it faces intensifying competition from aircraft, drones and Google Inc.'s fast-growing stable of space hardware.

The Department of Commerce approved its application to sell higher-resolution images to customers other than the U.S. government, expanding opportunities in a global imaging and analysis market the Colorado-based company estimates to be worth around $12 billion this year.

The data is most prized by location service providers--notably big search or mobile companies such as Google and Nokia Corp.--looking to improve and leverage their online map functions to sell additional products, as well as sectors including energy and agriculture.

DigitalGlobe said the sharper images improve the quality of the algorithms that can be used by, for example, retailers to analyze cars in a store parking lot and allow users to identify the kind of vehicle, if not the manufacturer.

"It won't tell you whether it's a Porsche or a BMW," said Walter Scott, DigitalGlobe's co-founder and chief technology officer. "But it's the rocks and trees and the white space that's really left out [on existing maps] that can be an important gauge of economic activity." While its existing commercial service could identify whether a field was planted, the improved imagery would be able to identify the crop.

DigitalGlobe rose to prominence when it crowdsourced an effort to use its five satellites in the hunt for wreckage from Malaysia Airlines Flight 370, and it is already licensed to sell images of objects as small as 50 centimeters across to commercial and overseas customers.

The Commerce Department approval will allow sales of higher-resolution images, with the launch of a planned new satellite in August opening the way to market pictures of objects as small as 31 cm across from next year, though DigitalGlobe could move it to a lower orbit to improve this to 25cm.

Rivals using aircraft and drones can already capture and sell even more high-resolution images, with increasing demand from customers in the energy, mining and agriculture sectors to monitor infrastructure and production.

DigitalGlobe last year applied for restrictions on satellite providers be lifted ahead of the planned launch in August of its WorldView-3 satellite.

The market for so-called geospatial information that combines imagery and other data is estimated by analysts to be worth around $10 billion a year. Google, which this week agreed to buy satellite startup Skybox Imaging for $500 million in cash, is the latest in a number of moves by the world's largest Internet search provider to collect and provide data from the sky. Skybox has a single satellite, but plans to launch as many as 24. Google is spending more than $1 billion to put hundreds of satellites in orbit to extend Internet access, people familiar with the matter said recently.

Howard Rubel at Jefferies Group said the clearance to sell sharper images would help DigitalGlobe capture market share from operators of planes and drones as it could use existing infrastructure, with potential margins as high as 80%.

Mr. Rubel said in a note to clients that it would also distance DigitalGlobe from Skybox, which has a smaller image library and needs to expand its satellite portfolio.

DigitalGlobe already sells mapping imagery to Google, Nokia and Microsoft Corp., though government customers accounted for 87% of its revenue last year. Its shares closed up 3.3% at $31.58, valuing the company at $2.31 billion.

Write to Doug Cameron at doug.cameron@wsj.com

Stocks mentioned in the article
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BAYERISCHE MOTOREN WERKE AG (PREFERENCE) 0.79% 48.32 Delayed Quote.-22.19%
DIGITALGLOBE INC 0.00%End-of-day quote.0.00%
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William D. McCombe Director
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