Author Topic: Recession of global satellite industry in 2016  (Read 4922 times)

Offline Katana

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Recession of global satellite industry in 2016
« on: 08/28/2017 06:24 AM »
13% shrink in satellite manufacturing industry, 0.2% growth in satellite services industry, 2% growth in launcher industry (while the launcher industry is extremely small).
Total 2% growth are majorly contributed from 7% growth in satellite ground equipment industry, mostly GNSS chips in mobile phone.

Doubtful market demand to support large LEO constellations in future, ironical compared to crazy boom in small launcher projects.

Another "Iridium recession" is coming?

http://spaceref.biz/organizations/satellite-industry-association/sia-2017-state-of-the-satellite-industry-shows-2-growth-and-revenues-of-260-billion.html

« Last Edit: 08/28/2017 06:32 AM by Katana »

Offline guckyfan

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Re: Recession of global satellite industry in 2016
« Reply #1 on: 08/28/2017 06:47 AM »
Doubtful market demand to support large LEO constellations in future, ironical compared to crazy boom in small launcher projects.

So people in rural areas really don't like to have fast internet. Brilliant analysis.

Offline high road

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Re: Recession of global satellite industry in 2016
« Reply #2 on: 08/28/2017 08:16 AM »
Or the opposite: the satellite industry anticipating the new smallsat launchers coming online or prices to start/continue dropping, and are awaiting the new prices and specs before they start building new satellites.

Edit: or the established players expect competition to go up from new players branching out, so they're not investing anymore, while new players are not yet ready to start.
« Last Edit: 08/28/2017 08:20 AM by high road »

Offline su27k

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Re: Recession of global satellite industry in 2016
« Reply #3 on: 08/28/2017 11:27 AM »
mainenginecutoff.com interviewed SpaceNews' Caleb Henry about this: https://mainenginecutoff.com/podcast/57, it looks like 2017 is worse, only 4 GEO commsat orders so far. The reason seems to be uncertainty caused by HTS satellite and large LEO constellations.

Offline gongora

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Offline Katana

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Re: Recession of global satellite industry in 2016
« Reply #5 on: 08/29/2017 03:46 AM »
Or the opposite: the satellite industry anticipating the new smallsat launchers coming online or prices to start/continue dropping, and are awaiting the new prices and specs before they start building new satellites.

Edit: or the established players expect competition to go up from new players branching out, so they're not investing anymore, while new players are not yet ready to start.
The satellite service section also experienced growth rate down to 0.2%, at the edge of decay.
It's hard to imagine end users waiting for next generation technology and stop buying services now.

Online meekGee

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Re: Recession of global satellite industry in 2016
« Reply #6 on: 08/29/2017 04:24 AM »
One interpretation is that GEO operators are hesitant to invest in 20 year assets when constellations are around the corner.

Ironically, this may be a self-fulfilling prophecy.
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Offline Steven Pietrobon

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Re: Recession of global satellite industry in 2016
« Reply #7 on: 08/29/2017 07:47 AM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.
Akin's Laws of Spacecraft Design #1:  Engineering is done with numbers.  Analysis without numbers is only an opinion.

Offline ChrisWilson68

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Re: Recession of global satellite industry in 2016
« Reply #8 on: 08/29/2017 10:20 AM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.

No, Iridium was counting on the opposite of rural folk -- they were going after the rich, globe-trotting travelers.  And they were going after the mobile market, not the home/business market.  The new constellations may or may not be financially viable, but if they aren't, it won't be because they made Iridium's mistakes.

Also, it's worth noting that while Iridium in 1999 wasn't viable, Iridium in 2017 is viable.  And it's not just because they don't have to pay the sunk cost of their constellation.  They're in the process of putting up a whole new replacement constellation, and they have the business to pay for it.

Offline ChrisWilson68

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Re: Recession of global satellite industry in 2016
« Reply #9 on: 08/29/2017 10:24 AM »
The data in the first post contradicts the title of this thread.  There wasn't a recession of the global satelite industry in 2016.  It grew by 2%.  2% growth is not a recession.

Offline high road

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Re: Recession of global satellite industry in 2016
« Reply #10 on: 08/29/2017 01:31 PM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.

No, Iridium was counting on the opposite of rural folk -- they were going after the rich, globe-trotting travelers.  And they were going after the mobile market, not the home/business market.  The new constellations may or may not be financially viable, but if they aren't, it won't be because they made Iridium's mistakes.

Also, it's worth noting that while Iridium in 1999 wasn't viable, Iridium in 2017 is viable.  And it's not just because they don't have to pay the sunk cost of their constellation.  They're in the process of putting up a whole new replacement constellation, and they have the business to pay for it.

All the more reason not to put up new expensive satellites right now. Old and aging satellites might need to be replaced, but new ones can wait a few years, rather than risk them facing competition from cheaper smallsats before the profits cover the investment. And even if the smallsat networks turns out not to be workable, the losses will probably be lower.

Or the opposite: the satellite industry anticipating the new smallsat launchers coming online or prices to start/continue dropping, and are awaiting the new prices and specs before they start building new satellites.

Edit: or the established players expect competition to go up from new players branching out, so they're not investing anymore, while new players are not yet ready to start.
The satellite service section also experienced growth rate down to 0.2%, at the edge of decay.
It's hard to imagine end users waiting for next generation technology and stop buying services now.

That is a good remark. Maybe increasing competition with 3/4G mobile data coverage via landbased networks, internet television and increasing connectivity to fiberoptic networks in more or less urban areas eating into their profit margins? This increases the need for new markets, so that's a good thing in the long term.
 

Offline ZachF

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Re: Recession of global satellite industry in 2016
« Reply #11 on: 08/29/2017 07:40 PM »
A good chunk of this could be explained by currency fluctuations. The US dollar gained a lot of value in 2015/16. In nominal US dollar terms the global economy was "smaller" in 2016 than it was in 2013.

https://knoema.com/tbocwag/gdp-by-country-statistics-from-imf-1980-2021?subject=U.S.%20dollars&country=World

If we go by share of world GDP, then the satellite industry looks like this:

2016: 261/75278.0 = 0.347%
2015: 255/74196.8 = 0.344%
2014: 247/78519.6 = 0.315%
2013: 231/76458.2 = 0.302%
2012: 210/74437.7 = 0.282%
2011: 177/73083.8 = 0.242%
2010: 168/65899.8 = 0.255%
2009: 161/60279.1 = 0.267%
2008: 144/63650.7 = 0.226%
2007: 122/58052.0 = 0.210%

Steadily outpacing the global economy as a whole.

Looks pretty good to me, there was a recession in 2009/10 it seems



Online meberbs

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Re: Recession of global satellite industry in 2016
« Reply #12 on: 08/30/2017 05:48 PM »
Also, it's worth noting that while Iridium in 1999 wasn't viable, Iridium in 2017 is viable.  And it's not just because they don't have to pay the sunk cost of their constellation.  They're in the process of putting up a whole new replacement constellation, and they have the business to pay for it.
This is worth repeating, because people keep pointing to what originally happened with Iridium, when Iridium is going through the cost of a full replacement right now. The market has changed.

Also, as others have said above, decline in growth of GTO sat orders is happening due to operators wanting to see what happens with the LEO constellations. (This is not just speculation but was heard from someone at a major manufacturer.)

Offline Katana

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Re: Recession of global satellite industry in 2016
« Reply #13 on: 08/31/2017 10:09 AM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.

No, Iridium was counting on the opposite of rural folk -- they were going after the rich, globe-trotting travelers.  And they were going after the mobile market, not the home/business market.  The new constellations may or may not be financially viable, but if they aren't, it won't be because they made Iridium's mistakes.

Also, it's worth noting that while Iridium in 1999 wasn't viable, Iridium in 2017 is viable.  And it's not just because they don't have to pay the sunk cost of their constellation.  They're in the process of putting up a whole new replacement constellation, and they have the business to pay for it.
So the Iridium becoming profitable does not imply other LEO constellations counting on rural areas are profitable.

Offline Katana

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Re: Recession of global satellite industry in 2016
« Reply #14 on: 08/31/2017 10:52 AM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.

No, Iridium was counting on the opposite of rural folk -- they were going after the rich, globe-trotting travelers.  And they were going after the mobile market, not the home/business market.  The new constellations may or may not be financially viable, but if they aren't, it won't be because they made Iridium's mistakes.

Also, it's worth noting that while Iridium in 1999 wasn't viable, Iridium in 2017 is viable.  And it's not just because they don't have to pay the sunk cost of their constellation.  They're in the process of putting up a whole new replacement constellation, and they have the business to pay for it.

All the more reason not to put up new expensive satellites right now. Old and aging satellites might need to be replaced, but new ones can wait a few years, rather than risk them facing competition from cheaper smallsats before the profits cover the investment. And even if the smallsat networks turns out not to be workable, the losses will probably be lower.

Or the opposite: the satellite industry anticipating the new smallsat launchers coming online or prices to start/continue dropping, and are awaiting the new prices and specs before they start building new satellites.

Edit: or the established players expect competition to go up from new players branching out, so they're not investing anymore, while new players are not yet ready to start.
The satellite service section also experienced growth rate down to 0.2%, at the edge of decay.
It's hard to imagine end users waiting for next generation technology and stop buying services now.

That is a good remark. Maybe increasing competition with 3/4G mobile data coverage via landbased networks, internet television and increasing connectivity to fiberoptic networks in more or less urban areas eating into their profit margins? This increases the need for new markets, so that's a good thing in the long term.

Land based networks coverage rate is approaching 75% in Africa, growing steadily at >5%  per year.
Full coverage of Africa could be happening in about  5 years (or less).


Coverage of Huawei, Chinese aggressive low cost telecom equipment vendor.


Those networks are part of strategical investment of China on African infrastructures, built similar to Chinese domestic version, highly competitive on cost and performance.

This reduce the market size of "rural satellite networks" permanently.

Also note the structure of satellite industry is unhealthy, most of significant growth (7%) occurs in GNSS modules market, which is virtually a consumer electronics market.

Both problems implies the satellite industry becomes less competitive compared to "normal" information technology industry.
« Last Edit: 08/31/2017 10:58 AM by Katana »

Offline Kansan52

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Re: Recession of global satellite industry in 2016
« Reply #15 on: 09/07/2017 11:22 PM »
So people in rural areas really don't like to have fast internet. Brilliant analysis.

Yes, they would like to have fast internet, but the rural population is not very big and therefore not profitable. The same mistake was made with Iridium.

Just saw this. Supporting your point would be Direct TV and Hughes when the first Direct TV started. They sold the rights of selling rural coverage to the rural cooperatives. The co-ops like it because they already sold C-band systems.

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Offline rayleighscatter

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Re: Recession of global satellite industry in 2016
« Reply #17 on: 09/09/2017 01:45 PM »
Operators aren't waiting on constellations, or launchers, or any of that. Most of them are waiting on demand to catch up to the current capacity oversupply. Launching new satellites now would only exacerbate the problem.

Offline Ronsmytheiii

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Re: Recession of global satellite industry in 2016
« Reply #18 on: 09/09/2017 02:43 PM »
Or with a lot of launches over the past few years, there is just too much capacity.

From Rupert Pearce, chief executive of Inmarsat:

Quote
“We are moving into an era of unprecedented capacity,” he said, calculating that the amount of broadband satellite bandwidth is set to boom by a factor of four by 2020 but demand only by a factor of three. “There is a massive glut. Investors are very concerned about what that means. Normally that is an environment where an industry would consolidate,” he says.

https://www.ft.com/content/a28ddb38-8021-11e6-8e50-8ec15fb462f4
« Last Edit: 09/09/2017 02:44 PM by Ronsmytheiii »

Offline butters

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Re: Recession of global satellite industry in 2016
« Reply #19 on: 09/10/2017 02:08 PM »
I watch the snazzy corporate promotional videos during the launch webcasts, especially Arianespace, explaining their coverage areas and beam-pointing capabilities and something something about helping first responders, and I often have no clue how these GEO comsats function in the context of commercial services. I assume they mostly carry TV but not necessarily directly to satellite TV subscribers, mostly syndication streams between networks?

If so, keep in mind that television is being disrupted by streaming video over the Internet. Are the GEO comsat operators threatened by this transition in video distribution from broadcast to streaming? Are their services relevant to IP networks?

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