GNSS Markets and Applications - Understanding GPS: Principles and Applications - page 638

The most important difference is probably that in the military market there is a
substantial return on investment (ROI) because a company's investment is relatively
low. Profitability is certainly also lower in military markets as the amount allowed is
usually limited by legislation but still the real ROI is much higher than in civil mar-
kets. In addition, the risk associated with the investment is much lower for the
military market.
Yet many military products and technologies eventually find their way into the
commercial market. These are called dual-use systems. After the Internet, GPS is
likely the second greatest modern dual-use DOD system in terms of impact on our
civilization.
In the first edition of this topic in 1996, GPS was described as an enabling tech-
nology. It certainly is that but it is also a ubiquitous technology. With the hindsight
of recent history, one can see how GPS has not only enabled new applications here-
tofore unknown, but it has permeated almost all aspects of commerce, agriculture,
leisure, travel, and of course, warfare (e.g., GPS-equipped “smart bombs”). At the
2004 Institute of Navigation, GNSS Conference, Frank Kreuse, head of the Chicago
Transit System, said that “GPS is quietly permeating the infrastructure.” What he
meant is that GPS is becoming a critical piece of the U.S. and other nations' struc-
tural underpinning as more and more people and functions depend upon it.
12.1.1 Market Scope, Segmentation, and Value
The definition of the GPS market that is used here is the dollar value of all the goods
(such as GPS receivers, antennas, and chipsets) and services (such as software devel-
opment, testing, integration, and location-based services) provided to users of GPS
or to applications that incorporate GPS receivers. We cannot logically include such
things as flight management systems or the total value of an integrated GPS/INS, but
the GPS receiver and integrating software is included. What is not included in any of
the forecasts for GPS or for GALILEO are the costs to develop, deploy, and maintain
the satellite constellations or the control segments. For example, GPS has cost about
$24 billion for the satellites and control segment through fiscal year 2004, with
another $8 billion to get to a modernized GPS and to the first GPSIII in fiscal year
2011 or fiscal year 2012 [8]. GALILEO will probably cost nearly $10 billion for
these elements by the time it is fielded [2]. These funds provided by governments are
also part of the overall GNSS market, as they will be mostly spent via contracts with
private industry. In the case of GALILEO, it is expected that a concessionaire will
fund part of the costs of the system in the hope of recouping that investment through
user fees for the regulated services. Whether that will come to pass remains to be
seen. Estimating this market segment is difficult, as it depends on future govern-
ments' plans to maintain, improve, and operate GNSS. At least for GPS, there is a
high confidence of continued funding. In the case of GALILEO, we will have to wait
until it is deployed and operating. In any case, the companies that benefit from this
market segment generally are not the same companies that serve the market
segments that deal with equipment or services for users of GNSS.
The GPS component of the GNSS market is obviously global, since users are all
over the world, yet much of the potential for global GPS market growth is dependent
on U.S. government actions and policy, particularly export policy. While highly