Author Topic: Thoughts on Commercial Space -- New Blog by George Sowers  (Read 11997 times)

Offline AncientU

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George Sowers speaks out:

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I decided to officially kick off my blog with some thoughts on commercial space.  I anticipate three parts.  This first part will contain some general observations.  Part II will chronicle the somewhat torpid history of commercial space activities and a few key lessons learned.  Part III will be my thoughts on the future of commercial space and how we can escape the doldrums.
   
I am passionate about space in general, but commercial space occupies a special place in my heart.  It represents an intersection of many of my beliefs:  my libertarian political philosophy, my capitalist economic philosophy, my overarching philosophy of power which elevates human exploration and exploitation of space to a moral imperative.  You see, for the space enterprise to be sustainable and grow, we must harness the power of the free market.  And that means commercial space.

Quote
Thoughts on Commercial Space, Part I
http://georgesowers.blogspot.com/

Yeah George! :)

Thanks to Eric Berger for re-Tweeting GS post.
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Hey kids, I've started a blog.  Check out my first post http://georgesowers.blogspot.com/  "Thoughts on Commercial Space"
https://twitter.com/george_sowers/status/873900132105846785
« Last Edit: 06/11/2017 06:59 PM by AncientU »
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Online Coastal Ron

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #1 on: 06/11/2017 07:41 PM »
Lots to look forward to, especially with Part III.

For Part I, I think his observations show that we are still in the early years of space transportation and space activity, since so much of what we can do in space can be traced to direct or indirect government supported efforts. Which is not a surprise, and echo's to some degree the aviation industry throughout it's history. And at least for the U.S. Government, it has a multitude of needs in space that the private sector is slowing taking over, both directly and indirectly.

No one has left any comments yet, so I think he needs to be better discovered. Worth a look.
If we don't continuously lower the cost to access space, how are we ever going to afford to expand humanity out into space?

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #2 on: 06/11/2017 10:54 PM »
Yes, his site is shinny new (Part 1 just today), though he's been at this for a long time.  His perspective on history of (attempted) commercialization in Part 2 will spawn discussion where his set of definitions in Part 1 are not particularly conversation stimulating.  I do think a pragmatic approach is fundamental to succeeding in space commercialization -- and getting the government* out of the way is also key.  Just like the old saying, " I'm from the government and I'm here to help..." -- run away, as fast as possible.

* GS put it nicely:
Quote
If space continues to be (mostly) the purview of governments, it is constrained by government budgets, subject to political winds, subject to hijacking by special interests both inside and outside government and subject to the gross inefficiencies and lack of accountability of any government enterprise.

Quite an independent thought by one steeped in USG service (servitude) at ULA.

So, GS is a free thinker!  Look forward to more from him.
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Online Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #3 on: 06/12/2017 01:29 AM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.
« Last Edit: 06/12/2017 01:32 AM by Lar »
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Online Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #4 on: 06/12/2017 03:42 AM »
(mod) Arguing over the proper role of government, even when responding to trolling (perhaps especially) is space policy and therefore off topic. Some posts removed.
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Offline Lars-J

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #5 on: 06/12/2017 06:14 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

Offline Craftyatom

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #6 on: 06/12/2017 07:35 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

The way I read it was that commercial space reaches a turning point when it no longer requires government money - can the business case close if the government decides it no longer wants to fund space, or is no longer able to?  For example, SpaceX had some rough times prior to COTS.  It's debatable whether it would've continued in earnest without government funding.  However, nowadays, it could certainly turn a profit even if NASA and the DoD gave up on space launches entirely.  So, nowadays, it is, in my opinion, "fully commercial" - entirely capable of operating without government funding - but it needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar...  I'd be interested on what Sowers' take on that distinction is.

Speaking of "purist" views on commercial, I'd be surprised if we don't see a mention of Beal in Part 2, given that their downfall is sometimes considered to be their utter refusal to accept government money.  My guess is that Part 2 will say that they had the right idea at the wrong time, and Part 3 will discuss how, if done today (or 10 years in the future), Beal could've been successful - or, at least, how companies like them need to be successful in order for space to become a large, healthy industry.  Personally, I'm not completely sold on the point, but it's a good possibility to explore, and I look forward to what Sowers has to say about it.
All aboard the HSF hype train!  Choo Choo!

Offline Star One

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #7 on: 06/12/2017 08:19 AM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.

I'd thought that broad discussion of what his personal politics are would be OT as you're just opening the door on the discussion by mentioning this as a mod.

Offline high road

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #8 on: 06/12/2017 09:33 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

The way I read it was that commercial space reaches a turning point when it no longer requires government money - can the business case close if the government decides it no longer wants to fund space, or is no longer able to?  For example, SpaceX had some rough times prior to COTS.  It's debatable whether it would've continued in earnest without government funding.  However, nowadays, it could certainly turn a profit even if NASA and the DoD gave up on space launches entirely.  So, nowadays, it is, in my opinion, "fully commercial" - entirely capable of operating without government funding - but it needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar...  I'd be interested on what Sowers' take on that distinction is.

Unfortunately, the same is true for all new commercial activities in space: commercial space stations, mining asteroids, any activities on the moon, none of those are likely to be able to cover the initial investments (or charge lower prices to attract more customers to recover those investments) without initial government supported demand for their services. Without government support for new activities, the commercialization of space stops with cheap launches and satellites.

Offline TrevorMonty

RL seems to be truly commercial, it doesn't seem to be relying on government payloads.


« Last Edit: 06/12/2017 10:58 AM by TrevorMonty »

Online LouScheffer

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #10 on: 06/12/2017 12:24 PM »
[...]  [existing companies] needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar... 
Funding a rocket startup from venture capital is completely a "business case" problem. If investors could be assured the market was there, then no government help would be required.

About 20 years ago, i was part of an attempt to predict the electronics industry 10 years into the future.   We predicted at that time that a semiconductor fab would cost well over a billion dollars, and hence there would be only 1-3 of them worldwide.  Semiconductor fabs are a lot like rockets - they are technically extremely tricky and unforgiving, if you are late you can lose your market, and even if they work you can lose on costs. 

When we went back 10 years later to see how our predictions fared, we found our predicted costs were correct, but we were very wrong about ability to invest.  There were, at that time, 52 different fabs worldwide.  So at least 52 different organizations, most of them purely commercial, were able to scrounge up a billion or two for a risky technical play.   The difference is that there was no doubt about the market - the bet is strictly about the ability to deliver.

So overall, there's plenty of money available if you can make a business case.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #11 on: 06/12/2017 01:25 PM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.

I'd thought that broad discussion of what his personal politics are would be OT as you're just opening the door on the discussion by mentioning this as a mod.

(mod)
I mentioned it in passing. Even that might be too far (push the "report to mod" button and the mods will discuss it, although I already self reported myself internally)... but the stuff I removed was overtly polemic rather than just a passing mention.

What I see in the discussion following that post now is pretty good... it is a dispassionate discussion of whether government as customer is necessary, and whether that is likely to change in future, without discussion of whether that is right or wrong. 

We are people, I think it is OK to mention that I "like Fords", (especially if it's in context, as here... Dr Sowers "likes Fords" too) but not OK to get into a big  discussion of "why Fords suck and Chevys are better"...  I hope that distinction helps.

« Last Edit: 06/12/2017 02:22 PM by Lar »
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Online Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #12 on: 06/12/2017 01:32 PM »
Unfortunately, the same is true for all new commercial activities in space: commercial space stations, mining asteroids, any activities on the moon, none of those are likely to be able to cover the initial investments (or charge lower prices to attract more customers to recover those investments) without initial government supported demand for their services. Without government support for new activities, the commercialization of space stops with cheap launches and satellites.

At 10,000/kg to LEO you might be right. at 10/kg to LEO I'm pretty sure you are not right. We're already seeing business cases for asteroid mining that suggest the total initial investment to get to break even  is the same order of magnitude as a big new terrestrial mine. And those cases are not predicated on 10/kg

And this is the thing that Musk and Bezos are focusing on. Reducing cost. Arguably the large scale settlement and expansion of the human footprint in the American West was massively accelerated by the order of magnitude lowering of transport cost due to the switch from clipper ships and wagon trains to railroads. The western railroads were built with (indirect) government support, in that they got big blocks of land given to them (alternate sections along their lines were given directly to them in some cases). That worked as well, or better, than direct cash grants would have.
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
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Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #13 on: 06/12/2017 01:47 PM »
The tipping point for truly commercial space probably is when venture capital exceeds government 'investment' by a factor of a few.  We may already be there on commercial space overall... as evidenced by the large constellation investments.  Distribution of VC funds still quite skewed, though.
« Last Edit: 06/12/2017 01:49 PM by AncientU »
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Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #14 on: 06/12/2017 01:54 PM »
[...]  [existing companies] needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar... 
Funding a rocket startup from venture capital is completely a "business case" problem. If investors could be assured the market was there, then no government help would be required.

About 20 years ago, i was part of an attempt to predict the electronics industry 10 years into the future.   We predicted at that time that a semiconductor fab would cost well over a billion dollars, and hence there would be only 1-3 of them worldwide.  Semiconductor fabs are a lot like rockets - they are technically extremely tricky and unforgiving, if you are late you can lose your market, and even if they work you can lose on costs. 

When we went back 10 years later to see how our predictions fared, we found our predicted costs were correct, but we were very wrong about ability to invest.  There were, at that time, 52 different fabs worldwide.  So at least 52 different organizations, most of them purely commercial, were able to scrounge up a billion or two for a risky technical play.   The difference is that there was no doubt about the market - the bet is strictly about the ability to deliver.

So overall, there's plenty of money available if you can make a business case.

Excellent example.  Hard to foresee the emergent demand in a true growth area.
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Online oldAtlas_Eguy

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #15 on: 06/12/2017 02:55 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #16 on: 06/12/2017 04:41 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Formal 'venture capital' is not the only source of funding -- SpaceX and Blue Origin are investing a ton of their own capital into LV development, engine development, etc.  Not sure how internal R&D funding is estimated in the financial world, but suspect it is of same order of magnitude as VC's $1.8B last year, still leaving a big gap to government funding.
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Online oldAtlas_Eguy

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #17 on: 06/12/2017 04:54 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Formal 'venture capital' is not the only source of funding -- SpaceX and Blue Origin are investing a ton of their own capital into LV development, engine development, etc.  Not sure how internal R&D funding is estimated in the financial world, but suspect it is of same order of magnitude as VC's $1.8B last year, still leaving a big gap to government funding.
Yes but that comparison was just to US gov spending. The comparison should be worldwide "VC" investrment to worldwide gov "investment" on a yearly basis. I still think it is just about a 1 to 5 ratio.

But here is another element to think about and that is the efficiency of the usage. How much funds of "VC" does it take vs the amount of gov "investment" to achieve same task? 1 to 2? 1 to 3? 1 to ??? This was part of Sowers comments is that private only does a more efficient job of work accomplished for the funds used. We see this significantly with what SpaceX spends and accomplishes vs what a gov controlled program would spend. But here is another twist and that is established corporations can act just like a gov in strangling and in inefficient spending of funds by a subsidiary trying to do space innovations. So the problem is not a VC vs gov funding but a efficiency of usage of funds (a cultural problem by the developer).

So if the VC investment equaled the gov "investment" it would actually be accomplishing much more.
« Last Edit: 06/12/2017 04:55 PM by oldAtlas_Eguy »

Offline savuporo

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #18 on: 06/12/2017 10:30 PM »
Satellite industry analysts read the blog post and this thread and go Where's The Flux ?
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Online Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #19 on: 06/12/2017 10:32 PM »
Satellite industry analysts read the blog post and this thread and go Where's The Flux ?

Do you have any links to reactions? Those would be interesting reading. Or is that just your take? Thanks!
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Offline Zingpc

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #20 on: 06/12/2017 11:11 PM »
We are witnessing private companies doing ambitious research on their own without a government agenda.
There is an aboundance of money for new space now. Once we get $5 million dollars 200kg into Leo and $30 million for 20000 kgs. What SpaceX has achieved in ten years is amazing. And remember the govt money was for services at a fraction of the cost previously for stuff to the space station.

There is a lot of hype on the size of the market for launchers that have not yet come on stream. But they will in the next two years. Then we see what happens to the hype.
« Last Edit: 06/12/2017 11:12 PM by Zingpc »

Offline okan170

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #21 on: 06/13/2017 12:37 AM »
We are witnessing private companies doing ambitious research on their own without a government agenda.
There is an aboundance of money for new space now. Once we get $5 million dollars 200kg into Leo and $30 million for 20000 kgs. What SpaceX has achieved in ten years is amazing. And remember the govt money was for services at a fraction of the cost previously for stuff to the space station.

There is a lot of hype on the size of the market for launchers that have not yet come on stream. But they will in the next two years. Then we see what happens to the hype.

Too bad that unlike government work, a lot of it remains secret and non-public.  I guess thats the sacrifice we make with commercial, more is done, but less benefits and spinoffs to the public.  ::)

 (I think thats all I'll say, its abundantly clear the way this forum/thread is leaning politically.)

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #22 on: 06/13/2017 10:27 AM »
We are witnessing private companies doing ambitious research on their own without a government agenda.
There is an aboundance of money for new space now. Once we get $5 million dollars 200kg into Leo and $30 million for 20000 kgs. What SpaceX has achieved in ten years is amazing. And remember the govt money was for services at a fraction of the cost previously for stuff to the space station.

There is a lot of hype on the size of the market for launchers that have not yet come on stream. But they will in the next two years. Then we see what happens to the hype.

Too bad that unlike government work, a lot of it remains secret and non-public.  I guess thats the sacrifice we make with commercial, more is done, but less benefits and spinoffs to the public.  ::)

 (I think thats all I'll say, its abundantly clear the way this forum/thread is leaning politically.)

Private companies cannot survive unless they offer something to the public that is a sufficient benefit that they will buy it.  Look at all the micro-electronics industry... do you have a smart phone?  USG pioneered that technology, but it wasn't until the private sector ran with it that benefits to the public flowed.  Same with the internet.  Same with space.
« Last Edit: 06/13/2017 10:28 AM by AncientU »
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Offline Zingpc

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #23 on: 06/14/2017 09:41 PM »
Most of Rocket Labs money was private, and they are about to revolutionise small orbital rocketry.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #24 on: 06/18/2017 06:09 PM »
Too bad that unlike government work, a lot of it remains secret and non-public.  I guess thats the sacrifice we make with commercial, more is done, but less benefits and spinoffs to the public.  ::)

I can't find the original article that I found this information on, but if you look at the chart of the top 20 publicly-traded R&D spenders globally:

Top 20 R&D Spenders 2005-2015 | PwCís Strategy&

There is only one "Aerospace & Defense" company that shows up during that 10 year period - Boeing. And only for one year, 2010.

Contrast that with the "Automotive" industry, which had five of the top 20 in 2015, with VW being the top R&D spender for the last 3 years.

The "Computing & Electronics" industries had four in the top 20 for 2015, with Samsung and Intel at #2 & 3, and Apple at #18. I think the latest data shows Apple higher on the list now, but VW is still on top.

Two takeaways for me:

1.  The private sector is spending a lot of money on R&D, and though we may not see it before it shows up in a product, we the public do benefit from that R&D. And usually today's proprietary technology turns into tomorrows commodity technology, so proprietary R&D eventually benefits everyone.

2. It should not be a surprise that "Aerospace & Defense", which is dominated by government contractors, is so absent from this list. When the government is willing to pay a company to do R&D, that company has little incentive to do R&D on their own. Boeing, who only showed up on the list once in 10 years, has their commercial airplane division, so they have commercial customers that they need to spend R&D money on. But otherwise government contractors have no incentive to spend their own money on R&D for potential government work - or at least not a lot.

What I think this could mean is that when business models are discovered for expanding humanity out into space then we should see more proprietary R&D money also being spent on expanding humanity out into space. But I don't expect much government money being spent on expanding humanity out into space, meaning more and more space will be taken over by the private sector. Which is either good or scary...
If we don't continuously lower the cost to access space, how are we ever going to afford to expand humanity out into space?

Offline M.E.T.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #25 on: 06/18/2017 06:38 PM »
Something I've been pondering on is the almost insurmountable barrier to entry that SpaceX and probably Blue Origin as well, will create once they have perfected reusability. To me it seems that we are witnessing a unique window of opportunity - largely grabbed by SpaceX - where revenues per launch are still at pre-reusability levels, which means that New Space launch providers can recover the costs of their reusability experiments at expendable launch prices.

Put differently, they are able to recover billions spent on reusability R&D, by charging $62m per launch, or close to it, for the forseeable future. So they could recover that investment in little more than a year or perhaps two.

Now imagine what happens once full reusability has been developed, let's say 5-10 years from now, with ITS and New Glenn type fully reusable rockets having become the norm.  Any new entrant into the market would have to develop a completely new rocket from scratch, with the paltry expected return of maybe 10% of the revenue currently earned for a payload delivered to orbit. Perhaps only 1% even, if Musk can be believed.

So to recover your investment you would have to launch 10-100 times as many payloads as the first mover - Spacex - needed to do at the same point in their journey. And that's if you can even attract any customers once SpaceX and Blue Origin are already charging rock bottom prices based on full reusability.

My conclusion is that short of some revolutionary new technology breakthrough, the rocket launch market will pretty much be sealed off to new entrants once SpaceX and Blue Origin have achieved full reusability. The return on investment will simply not be there for new entrants to overcome the barriers to entry established by the first mover. And the only reason Blue Origin (as the first follower) is even able to have any prospect of success, is because they don't care about making a profit due to having a virtually bottomless pit of research money supporting their efforts, as a pet project of their founder.

But even Blue Origin would be unsuccessful if they arrived 10 years later, with something like ITS already in full operation.

So as far as the commercial launch industry is concerned, I think it has pretty much been closed for new entrants who missed the initial reusability window of opportunity, which is already closing, and will slam shut once 2nd stage reusability has been perfected.
« Last Edit: 06/18/2017 06:42 PM by M.E.T. »

Offline Lars-J

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Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #26 on: 06/18/2017 11:51 PM »
No, the window will not close if SpaceX and Blue Origin succeed with reusability. Just like with any technology  breakthrough, the followers will have the benefit of knowing what works. (And what doesn't)

Will it still be a difficult? Of course, but it's not exactly easy to break into the expendable launch business either...
« Last Edit: 06/18/2017 11:52 PM by Lars-J »

Offline meekGee

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #27 on: 06/19/2017 12:10 AM »
No, the window will not close if SpaceX and Blue Origin succeed with reusability. Just like with any technology  breakthrough, the followers will have the benefit of knowing what works. (And what doesn't)

Will it still be a difficult? Of course, but it's not exactly easy to break into the expendable launch business either...

MET's point is that with reusability, launch prices will come down.  Or rather, when there are at least two providers, launch prices will come down.

Entrant #3, who is only starting now and will hit the market in 5-10 years, is looking at a very uncertain price model, since who knows what launch prices will be.

SpaceX, and to some extent BO, maybe, get to dictate how quickly prices come down, recouping R&D expenses, and then maximizing profits. (not profits-per-launch, but profits in general).

Until BO actually joins the game, it's entirely SpaceX's.
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Offline Lars-J

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #28 on: 06/19/2017 01:01 AM »
...and you are missing my point. Followers won't need to spend as much on R&D when how to do it has been demonstrated.

Offline Danderman

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #29 on: 06/19/2017 01:13 AM »
It would almost seem like the more money spent in the commercial sector, more progress in made in the industry, whereas money spent on government systems seem to result in more of the same, with few exceptions.
« Last Edit: 06/19/2017 01:15 AM by Danderman »

Offline high road

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #30 on: 06/19/2017 09:36 AM »
It would almost seem like the more money spent in the commercial sector, more progress in made in the industry, whereas money spent on government systems seem to result in more of the same, with few exceptions.

Biased naturally by commercial entities not spending a lot of money on things that don't have a reasonable chance of succeeding to make an adequately big impact. While there is a powerful tendency to commercialize good ideas asap, even though the initial steps have been taken by governments.

Offline M.E.T.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #31 on: 06/19/2017 11:37 AM »
...and you are missing my point. Followers won't need to spend as much on R&D when how to do it has been demonstrated.

To me the issue goes beyond R&D spent on reusability. A newcomer would need to spend R&D in general, just to design, build, test and bring their rocket to operation - whether it includes reusability or not. That is a substantial investment. But unlike in the past, where this money could be recovered via relatively few, high value launches, the initial investment will now have to be recovered through a very different business model, with low margins spread over many more launches, over a much longer time period. Because the revenues per launch will be so much lower than in the past.

To make this even worse, any newcomer is likely to face significant risk of catastrophic failure in the range of maybe 10% of initial launches, dropping to perhaps 5% or lower as they become more established. In the past, such a catastrophic loss would have lost you the vehicle for a single launch, and your budget would have included having to build a new vehicle for the next launch anyway.

But now, in the new "low revenue per launch" game, the lost vehicle would represent the loss of an asset that was needed to generate revenue from as many as 100 launches in the future. This is because the business model of your competitors would be built around getting the theoretical 100 launches  from each reusable rocket, and their prices would reflect this. So for the newcomer to compete, he would need to do the same, or else be uncompetitive in the market.

So all of the above sketches a picture of an industry that is no longer built around a few, high value launches. But instead it becomes one of massive economies of scale, low margins on each individual launch, and huge barriers of entry to newcomers.

The chance to finance your new, more efficient rocket company with overpriced "Old Space" launch revenues will be gone within a couple of years. Certainly within 5 years, once upper stage reusability is perfected. After that, the existing launch providers will have an asset that only makes money at marginal rates, over hundreds of launches. A new entrant will need to carry the development costs while waiting for dozens of launches to recover that cost. And that's assuming they have no failures and can compete on price with the established players sufficiently to attract customers in the first place.

A tough ask, in my view.
« Last Edit: 06/19/2017 11:42 AM by M.E.T. »

Offline envy887

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #32 on: 06/19/2017 11:44 AM »
Once both the technical viability of, and business case for rapidly reusable launch is proven, it will be MUCH easier​ to get financing for commercial development of new vehicles.

Offline M.E.T.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #33 on: 06/19/2017 12:01 PM »
Once both the technical viability of, and business case for rapidly reusable launch is proven, it will be MUCH easier​ to get financing for commercial development of new vehicles.

I don't doubt that the technology will be proven. I doubt that the Business Case will be obvious for new entrants, unless they have some kind of breakthrough technology that fundamentally changes their value offering.

Since reusability changes the launch business to a low margin, high volume game, it perhaps becomes analogous to the auto industry. Sure, someone could come along with sufficient financing to build a new car. But first they have to build the factories, do the R&D and produce their first car. And then they need to sell enough to justify the investment, and do so in competition with the established players.

How many new US car companies have we seen in the last few decades? There may be more, but I can only think of Tesla, really. And in their case it was because they brought something fundamentally new to the market. And even then, they are seen as something of a miracle case, as yet unproven.

How would a new car company be able to compete with Ford, GM etc. with just a comparable product, rather than a breakthrough one? My point is that once SpaceX and Blue Origin have perfected reusability, they will effectively remove, or at the very least reduce, the business case for new entrants to try and enter the market.

Offline spacenut

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #34 on: 06/19/2017 12:36 PM »
I think once SpaceX and Blue Origin get there reusable rockets working steady, than Boeing and Lockheed will follow.  They will either still use ULA or on their own.  If they want to continue their business beyond aircraft into space, they will have to expend the research money into reusable rockets.  Same with Ariane Space, Russia, and China, maybe others.  All will be playing catchup. 

I think we are on the verge of some serious space exploration in the next 10-20 years.  Reusable rockets, new rocket building materials, asteroid mining, moon mining, Mars colonization. 

I would hope to see within 50-100 years large O'Neil colonies at L1 or L2 moon vicinity, maybe even one near Mars using martian resources.  Eventually O'Neal colonies near Jupiter and Saturn's moons.  All kick started by SpaceX and Blue Origin with reusable rockets.  Venture capital for all these projects will follow these two just like people and settlers following the railroads westward. 

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #35 on: 06/19/2017 12:42 PM »
The National agencies must follow, whatever the cost.  Other domestic competitors have to deal with SpaceX and Blue, plus several other heavily/completely subsidized programs.  This will make the wall tougher to overcome as new vehicles come on line.  I don't expect Boeing or LM to follow, though either could have easily led the way (from a talent and resources perspective, but not culturally).
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Offline envy887

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #36 on: 06/19/2017 01:10 PM »
Once both the technical viability of, and business case for rapidly reusable launch is proven, it will be MUCH easier​ to get financing for commercial development of new vehicles.

I don't doubt that the technology will be proven. I doubt that the Business Case will be obvious for new entrants, unless they have some kind of breakthrough technology that fundamentally changes their value offering.

Since reusability changes the launch business to a low margin, high volume game, it perhaps becomes analogous to the auto industry. Sure, someone could come along with sufficient financing to build a new car. But first they have to build the factories, do the R&D and produce their first car. And then they need to sell enough to justify the investment, and do so in competition with the established players.

How many new US car companies have we seen in the last few decades? There may be more, but I can only think of Tesla, really. And in their case it was because they brought something fundamentally new to the market. And even then, they are seen as something of a miracle case, as yet unproven.

How would a new car company be able to compete with Ford, GM etc. with just a comparable product, rather than a breakthrough one? My point is that once SpaceX and Blue Origin have perfected reusability, they will effectively remove, or at the very least reduce, the business case for new entrants to try and enter the market.

Space transport is ripe for breakthroughs because existing technology has only scratched the surface of what is possible. Consider the first 50 years of automotive development... there was a new car company around every corner.

Offline spacenut

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #37 on: 06/19/2017 01:24 PM »
Yes, but the first internal combustion engine was in the late 1860's.  It wasn't until the 1890's that it began to take off.  Then it wasn't until the 1920's that automobiles took off. 

It also took a while for the steam locomotive to get enough track built to become competitive with riverboats and wagons. 

Others will be forced to follow or they will be out of the launch business.  I see more competition from foreign companies that their government supports to compete with SX and BO.  Don't know if Boeing and Lockheed will follow, or they may develop flyback boosters as a different approach. 

Rockets and spacecraft are harder than vehicles, trains, steamships, even aircraft, thus taking longer to get reusable. 

Offline M.E.T.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #38 on: 06/19/2017 01:56 PM »
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.

The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.

That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.

Offline laszlo

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #39 on: 06/19/2017 02:02 PM »
Yes, but the first internal combustion engine was in the late 1860's.  It wasn't until the 1890's that it began to take off.  Then it wasn't until the 1920's that automobiles took off. 

It also took a while for the steam locomotive to get enough track built to become competitive with riverboats and wagons.  ... Rockets and spacecraft are harder than vehicles, trains, steamships, even aircraft, thus taking longer to get reusable.

Are they actually harder relative to the existing technology? The Space Shuttle was flying orbital missions reusably just 24 years after the first satellite went into orbit. That's the same order of timespan as your first dates. The second dates match nicely with SpaceX being on the threshold of demonstrating the commercial viability of used rockets.

Offline high road

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #40 on: 06/19/2017 05:11 PM »
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.

The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.

Compared to the cost of reinventing mining equipment to work in microgravity and without intensive maintenance, launch costs are negligable.

Offline JasonAW3

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #41 on: 06/19/2017 08:09 PM »
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.

The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.

That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.

I'm not so sure I can agree with you on this.

      While the tourist trade will be important, overall, the space industry has been hampered, largely, by the expense of launch services.  we're seeing an explosion, so far, of short term micro and small sats, due to a combination of both more advanced microelectronics and cheaper launch services.  Given sufficient cost drops, major colleges and universities could and likely would sponsor their own long term sats for both Earth and space observations, as well as eventually, sponsoring and building their own interplanetary space probes.

      Universities have, already, sponsored and built experiments launched on NASA probes, and having probes of their own, that they have less restrictions of what experiments they put on them, would have a huge appeal to such institutes of learning.

      Corporate sponsors are already sending out their own small sats and probes, so building larger craft, designed to exploit microgravity, as well as available resources in space, are natural growth areas that are only now being addressed.
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Offline M.E.T.

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #42 on: 06/19/2017 08:36 PM »
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.

The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.

That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.

I'm not so sure I can agree with you on this.

      While the tourist trade will be important, overall, the space industry has been hampered, largely, by the expense of launch services.  we're seeing an explosion, so far, of short term micro and small sats, due to a combination of both more advanced microelectronics and cheaper launch services.  Given sufficient cost drops, major colleges and universities could and likely would sponsor their own long term sats for both Earth and space observations, as well as eventually, sponsoring and building their own interplanetary space probes.

      Universities have, already, sponsored and built experiments launched on NASA probes, and having probes of their own, that they have less restrictions of what experiments they put on them, would have a huge appeal to such institutes of learning.

      Corporate sponsors are already sending out their own small sats and probes, so building larger craft, designed to exploit microgravity, as well as available resources in space, are natural growth areas that are only now being addressed.

But all of that growth relates to what people can do in space, thanks to cheap launches. None of it is focused on making money by providing cheap launches. Cheap launches becomes the catalyst for the explosion of the space industry. It does not represent the money making mechanism itself. Merely the platform that enables the money making to take place in orbit and beyond.

SpaceX themselves admit this. Hence their focus on the satellite constellation. The revenue of which will dwarf the money they can hope to make from launch services.
« Last Edit: 06/19/2017 08:37 PM by M.E.T. »

Online oldAtlas_Eguy

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #43 on: 06/19/2017 08:58 PM »
Access to space supply and demand. As demand rises the average prices will rise or not drop even when the costs of the LV's become cheaper. At the moment there is actually a glut of LV supply. But as prices of LV's drop the demand will start to rise. At some point the supply and demand will equalize enabling late comers to be able to develop their custom LV solutions to make enough to pay off the cost of development. As the supply goes back up prices start to drop again. The interesting thing here is that these prices are no going to be an even steady decrease but more like step functions as new tech (EXAMPLE: new reusable LV with lower costs capable of vastly greater number of launches) becomes available. We are at the start of one such step down that offers lower prices and greater quantity.

At each step occurrence the payload markets then adjust their prices and quantities which up the demand.
Graph example:
|L
|L
|L
|LLLLLLLLL               
|               L               PPPPPPPP
|               LLLLLLLPPPLLLLLLL
|                     PPP
|          PPPPPP
|     PPP
|PPP

L Average Launch prices
P Number of payloads (in equivalent unit of mass)

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #44 on: 06/19/2017 11:22 PM »
We are wandering a bit from George's blog statements -- let's call it 'exploring the parameter space' which sounds more complimentary. 

Here is what George said about public vs private/commercial space:
Quote
In this spectrum, what I mean by commercial space is pure commercial space, or at least as close to the top of the list as possible.  The reasons are economic.  If space continues to be (mostly) the purview of governments, it is constrained by government budgets, subject to political winds, subject to hijacking by special interests both inside and outside government and subject to the gross inefficiencies and lack of accountability of any government enterprise.

On the other hand, a pure commercial enterprise is subject to the tyranny of consumers who will vote with their feet if the product or service does not meet their needs in both price and performance.  It is subject to competition not just from other space companies, but any other idea that meets the same consumer demand.  For example, satellite communication services compete with terrestrial communication services. Furthermore, it is accountable to investors who expect a return on their investment.  All these pressures drive innovation and efficiency resulting in a continual reduction in cost and increase in performance. 

Right now, the purest commercial space -- communications -- is expanding and seeking a product (launch service, for instance, or satellite manufacturer) which best meets their needs in both price and performance -- or they vote with their feet.  Isn't the presence of this customer (and hopefully many more like them in the future) fueling space commerce growth much more than launch service providers?

Market expansion is more function of demand pushing supply, than supply pulling demand.  Seems the opposite of what oldAtlas_Eguy is saying, but I'm not sure.
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Offline JasonAW3

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #45 on: 06/19/2017 11:42 PM »
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.

The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.

That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.

I'm not so sure I can agree with you on this.

      While the tourist trade will be important, overall, the space industry has been hampered, largely, by the expense of launch services.  we're seeing an explosion, so far, of short term micro and small sats, due to a combination of both more advanced microelectronics and cheaper launch services.  Given sufficient cost drops, major colleges and universities could and likely would sponsor their own long term sats for both Earth and space observations, as well as eventually, sponsoring and building their own interplanetary space probes.

      Universities have, already, sponsored and built experiments launched on NASA probes, and having probes of their own, that they have less restrictions of what experiments they put on them, would have a huge appeal to such institutes of learning.

      Corporate sponsors are already sending out their own small sats and probes, so building larger craft, designed to exploit microgravity, as well as available resources in space, are natural growth areas that are only now being addressed.

But all of that growth relates to what people can do in space, thanks to cheap launches. None of it is focused on making money by providing cheap launches. Cheap launches becomes the catalyst for the explosion of the space industry. It does not represent the money making mechanism itself. Merely the platform that enables the money making to take place in orbit and beyond.

SpaceX themselves admit this. Hence their focus on the satellite constellation. The revenue of which will dwarf the money they can hope to make from launch services.

So long as quality of service can be maintained, while lowering the costs, the quantity of launches will provide an ever increasing source of revenue.

And yes, they themselves branching out into satillite services is a quite logical development.  Boeing and Lockheed Martin do that already. 
My God!  It's full of universes!

Thoughts on Commercial Space, Part IIA
http://georgesowers.blogspot.co.uk/



Offline sanman

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #47 on: 06/25/2017 09:51 PM »
Thoughts on Commercial Space, Part IIA
http://georgesowers.blogspot.co.uk/

Regarding 1.0, 2.0, 3.0, 4.0 -- what's 5.0 supposed to look like - Space Tourism to LEO? Or are there further steps to be seen before that?

What do the steps beyond 4.0 look like? Any speculations?

Offline joek

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #48 on: 06/25/2017 10:34 PM »
What do the steps beyond 4.0 look like? Any speculations?

Commoditization of launch services market, leading to lower launch services price, leading to new markets... or at least proof that the launch services market is (a) inelastic; or (b) elastic.  If the former, don't expect much to change; if the latter, who knows what new markets lurk out there?

Offline sanman

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #49 on: 06/26/2017 12:58 AM »
What do the steps beyond 4.0 look like? Any speculations?

Commoditization of launch services market, leading to lower launch services price, leading to new markets... or at least proof that the launch services market is (a) inelastic; or (b) elastic.  If the former, don't expect much to change; if the latter, who knows what new markets lurk out there?

Regarding elasticity/inelasticity - isn't this something that can be ascertained through customer surveys, etc - without having to wait for future results?

Offline Phil Stooke

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #50 on: 06/26/2017 01:05 AM »
"isn't this something that can be ascertained through customer surveys, etc. - without having to wait for future results?"

No, it can only be estimated.  the estimate might not be right.  Future results are the 'ground truth'.

Offline sanman

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #51 on: 06/26/2017 07:52 AM »
Is Reusability a sufficient game-changer, that it deserves its own distinct category (ie. 5.0)?

Online MikeAtkinson

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #52 on: 06/26/2017 08:35 AM »
Commercial Space 4.0 preceded Commerical Space 3.0, Bezos and Bigelow started investing in space before SpaceX was founded, let alone before COTS. Also smallsats and cubesats (first launch in 2003) were both several years before COTS.

I'm not quite sure about a better classification. But COTS, CRS and commercial crew should be separated from Falcon (which was developed purely commercially).

Another stand is Falcon 1, F9, FH, New Shepherd, New Glen and the host of small launchers in development. And the applications they enable (or at least make more viable), including LEO observation, LEO comms, asteroid mining and space tourism.

The final stand which is just getting started is the large commercial launcher BFR/BFS and New Armstrong and the applications they enable, including space industrialisation, Moon and Mars bases and colonies.

Offline high road

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #53 on: 06/26/2017 12:39 PM »
Is Reusability a sufficient game-changer, that it deserves its own distinct category (ie. 5.0)?

Strange, I was going to propose the opposite. The entrepreneurs described in phase 4 overlap with the ones succesful in phase 3. Unless phase 4 is later explained to contain the billionaires developing new kinds of payloads to put on those commercial launchers from phase 3, it's not a phase in and of itself. And even then, these phases overlap in time, so 'phase' might be a misnomer.

As for reusability being a 'phase': reusability has been under development since phase 1. What makes it game-changing at this iteration (phase 3), is that competing government bodies are no longer tacking on commercially unviable requirements (phase 1), actual demand for launches and TRL has caught up with business models (which wasn't the case in phase 2). Plus, reusability is only one of two roads being taken towards lowering the cost. The other being mass production. These aren't even mutually exclusive within a single company. The fact that multiple alternatives are being experimented with, using mostly private startup money, is the strongest identifying aspect of phase 3. COTS falls into phase 3 because the government in this case is much more a consumer/client rather than the main investor who bears the brunt of the risk of going over budget and not becoming succesful.

So how about making it: phase 3A: commercial launchers and phase 3B: new space applications. Both with mostly private investment and, wherever necessary, with programmes like COTS to help commercial suppliers manage their burn rate so they can attract investors much earlier in the game.

Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #54 on: 06/29/2017 07:25 PM »
Quote
Any space business counts launch as one of the largest costs as well as one of the highest risks.  Access to space remains a significant barrier to entry for any prospective commercial space business.

This base assumption by GS rings true, and is quite contrary to the frequently-heard 'launch costs are a tiny fraction' of spacecraft costs.  In more recent times, this seems to be increasingly true on the commercial side (though not on the USG side).  To the extent that it is true, lowering launch costs should stimulate new business... proving market elasticity does exist.
« Last Edit: 06/29/2017 07:48 PM by AncientU »
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Offline AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #55 on: 06/29/2017 08:06 PM »
Is Reusability a sufficient game-changer, that it deserves its own distinct category (ie. 5.0)?

Strange, I was going to propose the opposite. The entrepreneurs described in phase 4 overlap with the ones succesful in phase 3. Unless phase 4 is later explained to contain the billionaires developing new kinds of payloads to put on those commercial launchers from phase 3, it's not a phase in and of itself. And even then, these phases overlap in time, so 'phase' might be a misnomer.

As for reusability being a 'phase': reusability has been under development since phase 1. What makes it game-changing at this iteration (phase 3), is that competing government bodies are no longer tacking on commercially unviable requirements (phase 1), actual demand for launches and TRL has caught up with business models (which wasn't the case in phase 2). Plus, reusability is only one of two roads being taken towards lowering the cost. The other being mass production. These aren't even mutually exclusive within a single company. The fact that multiple alternatives are being experimented with, using mostly private startup money, is the strongest identifying aspect of phase 3. COTS falls into phase 3 because the government in this case is much more a consumer/client rather than the main investor who bears the brunt of the risk of going over budget and not becoming succesful.

So how about making it: phase 3A: commercial launchers and phase 3B: new space applications. Both with mostly private investment and, wherever necessary, with programmes like COTS to help commercial suppliers manage their burn rate so they can attract investors much earlier in the game.

The principal feature of Phase 3 is government neither dictating design nor controlling the implementation process -- largely violated in the current phase of commercial crew due to political interference.  Nevertheless, this stepping back has freed the market to consider a variety of solutions including the SpaceX reuse approach and upcoming alternatives such as New Glenn and SMART reuse.  Falcon and Antares are quite different solutions as were Dream Chaser, Dragon, and CST100(StarLiner).  Business structures/processes are radically different among the participants. 

For any market to be healthy, a variety of approaches need to be tested and refined in the fire of market competition; winners will emerge as will losers... but losers (having one possible outcome being failure) are as important an element as winners IMO.
« Last Edit: 06/29/2017 08:16 PM by AncientU »
"If we shared everything [we are working on] people would think we are insane!"
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Offline calapine

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #56 on: 07/08/2017 10:04 PM »
Dr. Sowers just posted part 2B of his Thoughts on Commercial Space series.

Offline georgesowers

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #57 on: 08/04/2017 01:10 AM »
Dr. Sowers just posted part 2B of his Thoughts on Commercial Space series.

What? No comments on part 2B?  Slackers!  ;)

Just started the next part which I think will be interesting because commercial space 2.0 (big LEO's) was an objective failure that is being rebooted as we speak. 

In the meantime, I've been in Iceland (stunning scenery and fascinating history/culture) and preparing a seminar for Colorado School of Mines next week on Space Resources.
Cheers,
George

Online MikeAtkinson

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #58 on: 08/04/2017 06:21 AM »
No mention of the satellite manufacturers in part 2B?

You mention Direct TV, but more important were BSkyB (Sky) and Al Jazeera. Providing a service of delivering other company's content was one thing, using satellites to deliver your own content in ways that address new markets was another.

In general terms of revenue or profit.

Launchers < satellites < services < applications < end user value

In term of end user value, GPS was one of the most significant. Satnav and the value it provides (less time wasted getting lost, better supply chain management, etc.) are hard to quantify but is very large. Although the satellites were government, the receivers and applications built on top of them were purely commercial.

Offline Oli

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #59 on: 08/04/2017 07:13 PM »
From the article:

Quote
These facts make it tough for any commercial company to break into commercial space on either the demand side (satellite operations), or the (launch) supply side.  All the initial satellite companies got their start as some sort of IGO or other heavily government supported entity.  The initial launchers were also government.  It was only after the trail was blazed that the private sector could or would step in.

Even then, profits proved elusive.

Not when it comes to sat operators. SES for example has a very healthy 5-year avg. op. margin of 49%.

Offline Oli

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Offline envy887

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #61 on: 08/28/2017 02:31 PM »
From part 2C:

Quote
Lesson Learned #3:  Beware the terrestrial competitor who has a scalable business model. Competing with terrestrial businesses from space is fraught with peril.  The terrestrial business model is generally scalable.  The cell phone company can put in some cell towers, gain some customers (revenue), then put in some moreóon a timescale measured in months.  The space business (in the mode of Iridium) must get everything fielded before any revenue accrues.  The timescale is measured in years.

Lesson Learned #4:  Be deeply suspicious of your own market analysis.  You should start from the premise that all commercial space business models suck (See Lesson Learned #1).  I still shake my head at the wild market analyses we used to justify the investment into Atlas V and Delta IV. We were assuming that the worldwide launch market would grow by 4 to 5 times its then size in just a few years. The fact that everyone got it wrong is little consolation.  If it seems too good to be true, it probably is.  Compounding the problem was that each side assumed they alone would garner the lionís share of that new market and priced accordingly.  Obviously, in the real world, the market will be shared among many competitors, some of whom donít have to recover investment or make a profit.  (See Lesson Learned #2).

Evident here is the lack of scalability of expendable launch. Launch costs were based on manufacturing rates required for predicted launch rates that never materialized, instead of closing the business case at current launch prices.

Did Teledesic have technical issues with data rate? With broadband, they had a offering that was far more difficult for cell providers to compete with than Iridium or Globalstar voice and slow data. Although, the demand for broadband was much lower in 2002, which wouldn't have helped Teledesic.

Offline Space Ghost 1962

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #62 on: 08/29/2017 01:06 AM »
Space related businesses have a real problem with "market acceptance risk". The reason is that you have such inaccessible and deep silos that disrupting them appears to bring too much risk and too little potential advantage.

As a result, all you have is highly speculative market research of the grandiose kind, which tends to be puffed even more.

Both Iridium/Skynet were dubious from the beginning, and Teledesic never closed as well, because there was little specific information on market acceptance, given the less developed demand for such products then.

Nowadays the story is quite different. The issue is more of delivering in the scope/scale of capacity/capability that leads to displacing ground based alternatives with a more attractive offering.

In short, the prior attempts were too insufficient to model the present ones off of.

Offline Proponent

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #63 on: 08/29/2017 01:31 PM »
What sorts of vehicles were proposed by Boeing and Alliant Techsystems in response to the Air Force's RFP in 1995?

Offline ethan829

What sorts of vehicles were proposed by Boeing and Alliant Techsystems in response to the Air Force's RFP in 1995?

Boeing proposed a vehicle that used SSMEs in a recoverable engine pod
http://www.globalsecurity.org/space/systems/eelv_b.htm

Alliant based their proposal on the Titan IV Solid Rocket Motor Upgrade

Offline john smith 19

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #65 on: 08/31/2017 09:55 AM »

But all of that growth relates to what people can do in space, thanks to cheap launches. None of it is focused on making money by providing cheap launches. Cheap launches becomes the catalyst for the explosion of the space industry. It does not represent the money making mechanism itself. Merely the platform that enables the money making to take place in orbit and beyond.

SpaceX themselves admit this. Hence their focus on the satellite constellation. The revenue of which will dwarf the money they can hope to make from launch services.
Actually there is at least one company that has know this all along.  :(

the structure of the market we have now will never lower the price of mass/unit currency by a significant enough amount to make massive expansion viable.

Governments, ELV mfgs and launch vehicle services providers are not set up to do this and most LV services companies don't want to do it as they are tied to their associated LV mfg.
"Solids are a branch of fireworks, not rocketry. :-) :-) ", Henry Spencer 1/28/11  Averse to bold? You must be in marketing."It's all in the sequencing" K. Mattingly.  STS-Keeping most of the stakeholders happy most of the time.

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