At about the same time, in 2007, the German government’s revenue from PSI was only €164,000. That revenue came from three main areas: legal information, vehicle information, and meteorological data. Meanwhile, cartography, statistics, medical information, geo-information, and environmental information from the government garnered little revenue. Although the market indicates that statistics and cartographic information have more potential value, the government did not appear to take advantage of this potential.


So what is the value of PSI? In discussing this, it is important to remember that the source data are only the starting point. For each application that puts these data to work and for every additional function and data set one adds, the value is increased—a higher step on the value chain. For a complex combination of data like statistics and geographical data, the value of the source data is increased by, say, a factor of five. And with information-based services like mapping, geocoding, and analyzing tools or applications, that factor may be 10. The further along the value chain, the greater the value that can be assigned to the data. This process of adding value is done by the private market. The PSI holder should make the offer, and the rest should be done by the service provider.


This is called value chain production. The value of the source data are quite low, but the costs of the source data in most cases are quite high. So how do we discover the value of the additional factors? In 2007 we had the chance to observe bids on some companies that provided cartographic data, such as Tele Atlas and Navteq. TomTom was bidding on Tele Atlas, and Nokia was bidding on Navteq, and the prices being discussed were about €2-3 billion for Tele Atlas and nearly €6 billion for Navteq. That was about ten times the annual sales of these companies.


Tele Atlas was not even profitable. TomTom’s profit in 2006 was €22 million, on sales of €1.8 billion. The interesting thing was that although the Tele Atlas and Navteq data maps were their own maps, the companies had bought the original maps from public bodies in the late 1990s. Afterwards, they added their own updates and digitized the data, and today these maps are proprietary and well along the value chain. There have been two other interesting acquisitions in the industry. Pitney Bowes bought MapInfo, a geomarketing software company, and Microsoft just bought Multimap, a Web map provider, for two to five times the annual sales.


Meanwhile, the reuse of geographical PSI lags, so what would be the right strategy for the PSI holder to open the PSI market? To answer that question we developed a performance matrix that facilitates strategic development. On one side we list PSI availability and quality of services (including usability of web services) from low to high. On the other side we list the price for PSI from low to high.



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