I'm glad SpaceX didn't go into smallsat launch market and didn't win XS-1, there're already plenty of smallsat launcher projects from new space, SpaceX needs to focus on taking on the traditional dinosaurs.
So assuming that the F9R first stage has a significant number of reuses without high refurbishment cost. Something in the range of 20+ launches. Then developing a small low cost upper stage using a single modified SuperDraco with vacuum nozzle and TVC or a pressure fed methane engine similar to what they will also need as a landing engine for MCT might give them a smallsat launcher with cost below that of Electron, even if they can meet their price target.
They can deliver a small second stage with a speed at least like a FH central core and have plenty of fuel left for RTLS so that upper stage would not need to produce high delta-v for orbit. It might be feasible to use airframes that have lost some of their stability so they are unsafe for standard loads but can do more launches with lower loads like smallsat launching.
I am aware that even if it is economically feasible SpaceX may not want to go in that direction for a number of reasons.
Wouldn't a DragonLab with an extra-large trunk equipped with a cubesat deployer and a deep cubesat magazine, going up towards a polar/SSO be somewhat more attractive? You lose the second stage, but as SpaceX seems increasingly disinterested in second stage reusability, that doesn't matter so much. A late life DragonV1 as a Dragon Lab, and marshall together a polar orbit cubesat cluster launch along with a short duration zero-g experiment group that can't be hassled to fly on ISS. Eject cubesats like the Space Head on a Dnepr on the way up from an extended trunk, or use a deep rack in the trunk and a small arm (chance for Altus?) to fling cubesats after reaching stable orbit.
The Electron thread shows there is a definite demand on smallsat launches. That got me thinking.So assuming that the F9R first stage has a significant number of reuses without high refurbishment cost. Something in the range of 20+ launches. Then developing a small low cost upper stage using a single modified SuperDraco with vacuum nozzle and TVC or a pressure fed methane engine similar to what they will also need as a landing engine for MCT might give them a smallsat launcher with cost below that of Electron, even if they can meet their price target.They can deliver a small second stage with a speed at least like a FH central core and have plenty of fuel left for RTLS so that upper stage would not need to produce high delta-v for orbit. It might be feasible to use airframes that have lost some of their stability so they are unsafe for standard loads but can do more launches with lower loads like smallsat launching.I am aware that even if it is economically feasible SpaceX may not want to go in that direction for a number of reasons.