Author Topic: Thoughts on Commercial Space -- New Blog by George Sowers  (Read 11996 times)

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.
My God!  It's full of universes!

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 »
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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%.

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