Comment by azernik | Hacker News Reader

Comment by azernik | Hacker News Reader

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tl;dr No. Commercial launch is a big market, and SpaceX is eating it alive.

SpaceX is finally following through on its promises and has put a lot of the technical risk of its strategy in the past. All that risk was priced into old valuations, so with a now-reliable and frequently-launched vehicle in Falcon 9, and successful follow-through on Falcon Heavy (less of a big deal economically than the media brouhaha makes it out to be), that risk has gone down and so the valuation is going up.

The launch business is a big [1] (but not enormous) one, and SpaceX has gone from around ~15% to ~45% market share in two years [2]. In my understanding, US DoD launches are a small, but particularly-high-margin subset of that market.

[1] $8.8B annually, according to https://www.businesswire.com/news/home/20180116005923/en/Glo...

[2] 2015-2017, according to SpaceX testimony to a Congressional committee: https://www.popularmechanics.com/space/rockets/a27290/one-ch...

For a tiny bit more context, the military market is a limited. Defense has N number of launches they need, regardless of price. If SpaceX pushes prices down by 50%, demand will not double or triple, at least not fast.

The commercial market will respond to price. SpaceX is all about lowering the price of space-access, and growing the market. More flights. New use cases.

Elon has a great grasp of microeconomics, at least the parts he needs. Tesla was also clever in this regard.

Cheaper launches gives defence new use cases too. They'll start to launch smaller satellites into more orbits. It'll take time to change their processes, but they'll be launching small/cube/chip sats with all sorts of sensors.

True but the DoD has a very long planning horizon. So it will take time for them to react.

I can say, buy not attribute, that they are in fact reacting quite quickly.

And for even more context, military spy satellites tend to cost a lot, somewhere in the $billions so way more than the launch. Commercial satellites often share common components and typically cost a few $100 million so not that much more than the cost of the launch. And in the commercial sector the transition to cheaper satellites to match cheaper launchers might be more feasible.

Good point. I hadn't even thought of that. Along with long horizons generally, this probably explains a lot about militaries' "price inflexibility." Launching is a smaller component of more expensive whole.

Same with the big NASA science payloads - if you're spending $8-9B on JWST, paying a $100M premium for a launch vehicle you're slightly more confident in is totally worth it.

And then there's the SpaceX space based global internet service coming soon to an orbit near you. They are predicting over 20 billion in revenue by 2025 if I recall correctly.

https://www.cringely.com/2018/04/06/the-space-race-is-over-a...

I'm in the wireless broadband industry, and no one I know thinks this space-based internet is a good idea. The rest of the world is going to small cells and they are going for a cell the size of a large city?

I'm a big fan of SpaceX, I'd prefer they stick to flying tourists and satellites. Railroads and airplanes got their start giving joyrides, why not do the same with space.

> I'm in the wireless broadband industry, and no one I know thinks this space-based internet is a good idea. The rest of the world is going to small cells and they are going for a cell the size of a large city?

The funny thing is, 5 years ago you could have said: "I'm in the space launch industry, and no one I know thinks those reusable rockets are a good idea. The rest of the world is eking out every last bit of performance, and they are going to sacrifice payload capacity for this?"

The established industry does not always know the best way forward.

Nobody in the mobile phone industry thought that iPhone was a good idea for Apple (no keyboard = hard to do email, no business market; only one operator, with bad network that was inefficiently used by iPhone; too expensive for regular consumers - the competition is fierce, many others tried to get in and failed).

I'm not saying that you're wrong, I'm saying you have no way of knowing whether you're wrong or not. Maybe something changed, something that will seem obvious in hindsight, and that makes all the difference in the world. As others said - the fact that SpaceX can launch those satellites much cheaper than anybody ever could, historically, may be the thing that changes the whole equation. Or maybe not - we'll see... but just because you are in the industry, that doesn't make it any more likely that you're right about this.

My understanding is that Google has already invested $1bn in the this tech with SpaceX. SpaceX's current $500m raise is for deploying this tech. You may be aware that Google has a had a bit of trouble with its ISP roll out using small cells and fibre. This system would allow direct last mile access.

However this approach only makes financial sense for SpaceX because of it's much cheaper access to space so it's not surprising that "no one else in the industry" thinks it's a good idea. It's not a good idea for them.

Damn, I'd prefer Google stay out of this. Well, at least it's not Facebook...

If I were them, I would do both with the same stone: Customers get terrestrial repeaters with their satellite antennas, and provide service to the local neighborhood. If you are in the vicinity of someone with a roof box, you connect to/buy from them. If not, you invest in a roof box and sell internet back to "the grid", rather analogous to roof solar.

Basically like treating the satellite as backhaul for small cells, and also having the customer BE the small cell. No fiber laying or city government permits or telephone pole work or anything.

That might be a pretty good option just from a protocol overhead standpoint.

Maybe there are good technical solutions to this that I don't know about, but I'm inclined to believe that a satellite could communicate more efficiently with a handful of high-throughput ground stations at once than it could hundreds or thousands of smaller ground stations that are continually connecting and disconnecting as they gain or lose line-of-sight. That's a lot of control messages to deal with.

First up, let me be clear that wireless technology is utter black magic to me. SpaceX's satellite internet service may or may not work in densely populated areas, I have no idea.

But what if their target market (at least for the beginning) were under-served rural areas? There are lots of villages and small towns in industrialised countries where the highest speed you can currently get is in the low single-digit MBit/s. Loads of people currently have no good internet access options but could afford SpaceX's service (based on what's publicly known about it, the estimates I've seen are that it will likely cost something between $50 and $100 per month). It would also be extremely interesting to businesses in such areas (Germany has quite a few of these, for example).

I think there might just be enough potential customers in sparsely populated areas to make this a profitable service. They can also provide backhaul for cell phone services in such areas.

Oh, and if they can get it working on ships (small sailing yachts, pleasure cruises, and commercial shipping could all profit from this) and airplanes, that might be another nice market to capture.

I don't see any reason they couldn't fly more satellites if their customer base justifies it. The problem they have relative to ground-based systems is the satellites are not stationary. So to increase coverage density on one spot, they have to increase density for everywhere else on the same orbit.

It might not be a good way to provide Internet to urban centers, but for those who live in low-population-density areas it could be a compelling option (i.e. it beats dial-up).

I wonder if talking about a "cell" is really an appropriate comparison. The Spacex technology is more an alternative to microwave fixed links and fibre backhaul. Just without any restrictions imposed by terrain, remoteness or time constraints.

But the most important thing will be the cost of the recieving equipment. That will determine if it is affordable for domestic use or just in commercial or industrial applications.

They're not a cellular network; their base stations are not innumerable tiny mobile devices. They'll be small but sizable permanent mounts, so they can control geographic density if needed. It's a different beast so the same pressures don't apply.

Heck, it's not even certain to be direct-to-consumer. Starlink makes for a really nice backhaul system, which could be really handy to feed a bunch of smaller terrestrial cells, for example.

I don't think SpaceX ever flew tourists. That would be Virgin Galactic.

I believe they took deposits to fly people around the moon this year but ended up canceling those plans

Sort of. They did take a deposit but that had been based on the assumption that the Falcon Heavy would do the flight with a Crew Dragon. Those plans have been cancelled as SpaceX no longer plans to use the FH for human flights to the moon (or anywhere, even orbit).

Instead they plan on using the BFR for that. I don't know what happens with that deposit that was made. Chances are it rolls over into getting whoever it was a flight on the BFR to the moon.

Neither of them did, both plan to.

This startup is just another vaporware to continue funding SpaceX. The money invested in it will ultimately end up in Spacex as it will be used to send all these satellites into the orbit.

So Spacex just won a client for a long time, and that too at the cost of investors money..

In other words, and elaborate Pyramid scheme...

BFR is arguably the biggest risk SpaceX has ever taken.

In absolute figures, perhaps. Relatively, Falcon One was by far the biggest risk.

Even if that doesn't pan out, SpaceX has a profitable business on its hands.

They're planning to discontinue Falcon 9 to free up factory space for BFR production while continue launching with their existing stock of reusable rockets. So there's quite a bit of risk there if BFR ends up getting too delayed.

Can't they just keep making Falcons if they run into delays with BFR?

They could but they'd have to retool the converted factory space back to making Falcons and there would certainly be disruptions.

They will not stop producing them until they are sure they can pull of BFR. The CTO has already said that Falcon 9 will be available as long as people ask for them.

By that point where they can no longer produce F9 they plan to have a fleet of Falcon 9 on the books that could continue for quite a while.

That, and also I think the satellite market may be in the process of being disrupted, as in: it has become much, much cheaper to build and launch a satellite, in particular with CubeSats.

Often markets where the barrier to entry is lowered this way tend to grow overall, so I don't think it is an unreasonable bet that the size of the satellite launch market will increase in coming years.

Market share is a really fluctuating/bad metric here, as the sample size is so small. This number is not consistent.

Looking at the charts, there doesn't seem to be a lot of noise in the data. 80-ish launches a year among all providers isn't that small of a sample size.

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