SpaceX: General Falcon and Dragon discussion (Thread 5)

[Blackjax]

Have I missed any aspects of the argument or can we consider the compressed summary above as a single post transcript and agree to disagree on the SpaceX thing?

It is not a disagreement when you are wrong

And that would be true so long as you can back your position with definitive evidence in support of it.  Until then it is simply an opinion and hence two differing opinions constitute a disagreement.  I'm happy to reevaluate my own positions in light of evidence or even when offered a persuasive argument based on logical reasoning.  Could you offer one or the other?

Spacex prices to the gov't are not the listed prices.  Nobody gets listed prices.  It is like a car without accessories or even tires.

I'm not certain I am understanding your how your point relates, but if I follow you it seems you are implying that SpaceX might end up charging the government higher prices which would largely cancel out the price differences between their services and buying a ULA launch, thereby invalidating my point that launch could be done substantially cheaper than ULA is doing it.  Do I have that right?  If so, I'm really curious to hear more detail on how you think this price spike from SpaceX would play out in concrete terms, because I'm not seeing it yet.

[MP99]

I'm very skeptical of any argument that SpaceX would have been 'better off' if they'd stayed with F1. In reality, they had no market for F1 that was any bigger than Orbital's market for Pegasus.
Based on the 60 Minutes interview, I'd say it's clear that without F9 / COTS NASA money, SpaceX would currently be either another Beal Aerospace, or a boutique NewSpace project on the verge of collapse somewhat like Bigelow.

Nope.  SpaceX had enough money from investors and so forth to keep going.  It was Musk who said he would have pulled the pin if F1 #4 had failed.  The plan was then to go to F5 but it proved unstable so they went to the F9 which provided a bigger market.  Got sidetracked on the way by NASA HSF but HSF was something Musk had been thinking about and modelling for a number of years.  It is his ultimate aim after all.

On what basis do you say that "F5 .. proved unstable so they went to the F9"?

Doesn't prove sequence of events, but:-

http://forum.nasaspaceflight.com/index.php?topic=24728.msg720443#msg720443

cheers, Martin

[Blackjax]

Doesn't prove sequence of events, but:-

http://forum.nasaspaceflight.com/index.php?topic=24728.msg720443#msg720443

cheers, Martin

Hmmm that was an interesting link on a number of levels unrelated to the F5 discussion.  I noted this:

Interested in electric propulsion.

Has there been any indication that they have staffed up in this area or otherwise pushed forward with any action on that interest?  It could line up with Elons comments about revealing a Mars strategy later this year.  Alternately it could mean they might use it to stack more small payloads on the FH and then position them on orbit using SEP.

[Antares]

And that would be true so long as you can back your position with definitive evidence in support of it.

Government contract prices are proprietary and/or restricted by the FAR.  You're not going to know what they are until you're behind the curtain.  You can choose not to believe the people who know, but you decrease the value of participating in the NSF forum.  Certain people on here don't blow smoke.

[Jim]

Until then it is simply an opinion

My point is not an opinion

[Blackjax]

And that would be true so long as you can back your position with definitive evidence in support of it.

Government contract prices are proprietary and/or restricted by the FAR.  You're not going to know what they are until you're behind the curtain.  You can choose not to believe the people who know, but you decrease the value of participating in the NSF forum.  Certain people on here don't blow smoke.

OK, but how does that prove anything related to the point on which Jim is flatly saying I am wrong, which is that launch costs can be significantly less than what we are seeing from ULA?  I am not accusing anyone of blowing smoke or trying to cast any other aspersions, I am really just asking for something a little more educational than a flat 'you are wrong'.  The whole government launch price thing is a tangent that I am not seeing relates closely to proving the point.

A company could approach ULA for an Atlas V launch and get a given price.  This is not some fixed list price which always applies to any Atlas V, it will depend on a number of factors deal by deal, but there is a general ballpark range that Atlas V launches will fall into.

At the same time the company could approach SpaceX and get a given price from them.  This is a little more transparent and also has some variability to it as well, but there is a general ballpark range that F9 launches will fall into.

My point is that the lower bound of the Atlas V launch cost bracket, based on what can be gleaned from publicly available evidence, will be significantly above the upper bound of the F9 launch cost bracket.

Now, perhaps what Jim meant to say was that there are secret ULA government launch prices that the public is not privy to which put them competitive to SpaceX or that they are enormously inflated to the government but could be competitive otherwise.  However given that his initial position was that we do not know that significantly cheaper launch costs are possible I don't think that is the point he was making.  In either case it would support my point not his, and how does what the government gets charged matter anyway since at no point was this discussion limited specifically to contracting with the government.

[cuddihy]

And that would be true so long as you can back your position with definitive evidence in support of it.

Government contract prices are proprietary and/or restricted by the FAR.  You're not going to know what they are until you're behind the curtain.  You can choose not to believe the people who know, but you decrease the value of participating in the NSF forum.  Certain people on here don't blow smoke.

OK, but how does that prove anything related to the point on which Jim is flatly saying I am wrong, which is that launch costs can be significantly less than what we are seeing from ULA?  I am not accusing anyone of blowing smoke or trying to cast any other aspersions, I am really just asking for something a little more educational than a flat 'you are wrong'.  The whole government launch price thing is a tangent that I am not seeing relates closely to proving the point.

A company could approach ULA for an Atlas V launch and get a given price.  This is not some fixed list price which always applies to any Atlas V, it will depend on a number of factors deal by deal, but there is a general ballpark range that Atlas V launches will fall into.

At the same time the company could approach SpaceX and get a given price from them.  This is a little more transparent and also has some variability to it as well, but there is a general ballpark range that F9 launches will fall into.

My point is that the lower bound of the Atlas V launch cost bracket, based on what can be gleaned from publicly available evidence, will be significantly above the upper bound of the F9 launch cost bracket.

Now, perhaps what Jim meant to say was that there are secret ULA government launch prices that the public is not privy to which put them competitive to SpaceX or that they are enormously inflated to the government but could be competitive otherwise.  However given that his initial position was that we do not know that significantly cheaper launch costs are possible I don't think that is the point he was making.  In either case it would support my point not his, and how does what the government gets charged matter anyway since at no point was this discussion limited specifically to contracting with the government.

You're comparing a Lambourgini to a Mustang and demanding Jim explain why the Lambourgini isn't overpriced. EELVs are bigger payload, far bigger deltaV, and proven schedule and performance.

It's just not an apples to apples comparison. Which is why SpaceX doesn't list an apples to apples price on their website. Apples to apples would be compared to Delta II.

[Blackjax]

You're comparing a Lambourgini to a Mustang and demanding Jim explain why the Lambourgini isn't overpriced. EELVs are bigger payload, far bigger deltaV, and proven schedule and performance.

It's just not an apples to apples comparison. Which is why SpaceX doesn't list an apples to apples price on their website. Apples to apples would be compared to Delta II.

Can you explain to me how this popular Atlas V variant:
http://www.astronautix.com/lvs/atlsv401.htm

Is not comparable to a Falcon 9:
http://www.astronautix.com/lvs/falcon9.htm

In terms of what payload they can deliver where, they are not identical, but they certainly don't appear to be so far apart that it is an apples to oranges comparison.

I'll certainly grant that the Falcon 9 is not even in the same league from a flight history standpoint, and has a long way to go before it is even close.  That being said, the fact that it has flown successfully twice proves it is not totally unworkable as a vehicle.  There may be teething pains and there may even be launch failures before it eventually gets its kinks worked out, but unless the steps taken to get those kinks worked out end up doubling the price, my point that it represents a significant reduction in launch costs vs. ULA and proves that significantly lower launch costs are possible stands.

Are you arguing that it will take a spike in launch costs which brings it up on par with ULA pricing in order for it to eventually become a proven launcher?

[SpacexULA]

Can you explain to me how this popular Atlas V variant:
http://www.astronautix.com/lvs/atlsv401.htm

Is not comparable to a Falcon 9:
http://www.astronautix.com/lvs/falcon9.htm

In terms of what payload they can deliver where, they are not identical, but they certainly don't appear to be so far apart that it is an apples to oranges comparison.

I'll certainly grant that the Falcon 9 is not even in the same league from a flight history standpoint, and has a long way to go before it is even close.  That being said, the fact that it has flown successfully twice proves it is not totally unworkable as a vehicle.  There may be teething pains and there may even be launch failures before it eventually gets its kinks worked out, but unless the steps taken to get those kinks worked out end up doubling the price, my point that it represents a significant reduction in launch costs vs. ULA and proves that significantly lower launch costs are possible stands.

Are you arguing that it will take a spike in launch costs which brings it up on par with ULA pricing in order for it to eventually become a proven launcher?

Price of Falcon 9 in 2005 $35 Million
Price of Falcon 9 in 2012 $59 Million

They are backlogged to 2016 if every launch goes off as scheduled (Including 6+ launches every year (including this one)). 

So tracking the price inflation out to 2016 that would be $62-65 Million or almost double the original cost.

Truth be told SpaceX has yet to process a significant mass payload that was not their own, they have yet to launch any payload to orbit using over 1/2 of the vehicles rates capacity, and their 1st significant mass non internal payload is not till late next year at the earliest.

Falcon 9 is no more real than Tesla Model S (Which my wife has a deposit on), it shows lots of potential, but dealing with internal customers is a lot easier than dealing with major external ones.

<---  Look at the call name, I am as big of SpaceX fan boy as there is, but SpaceX is no ULA and Falcon 9 is no Atlas.

[Blackjax]

Price of Falcon 9 in 2005 $35 Million
Price of Falcon 9 in 2012 $59 Million

They are backlogged to 2016 if every launch goes off as scheduled (Including 6+ launches every year (including this one)). 

So tracking the price inflation out to 2016 that would be $62-65 Million or almost double the original cost.

That is, assuming their price continues to progress along a straight line from prior figures.  I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were.  Given that they have a couple of flights under their belt now, their current prices probably track a lot more closely to real world prices than the 2005 figure did.  Their prices might rise (although that is by no means certain given that costs are tied heavily to flight rate), but I'm not seeing a good reason to believe that a straight line from history is an accurate model for predicting them.

Further, the point here is whether they are significantly lower cost than the alternatives, so simply predicting SpaceX costs does not give you all you need to evaluate things, you also need to estimate what the alternatives would cost at the same future point.  Is there a reason to believe that the alternatives would keep their costs under significantly better control?  Given the whole controversy about steeply rising ULA prices and the contentious block buy, the evidence seems to suggest the opposite.

Truth be told SpaceX has yet to process a significant mass payload that was not their own, they have yet to launch any payload to orbit using over 1/2 of the vehicles rates capacity, and their 1st significant mass non internal payload is not till late next year at the earliest.

Yep, hence my comment that they are not even in the same league as Atlas V and have a long way to go.  But do you have some reason to believe that proving out their hardware and operations will cause a massive spike in their costs?

[Jim]

I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were. 

And they are still finding out it takes more to do a launch

[QuantumG]

Price of Falcon 9 in 2005 $35 Million
Price of Falcon 9 in 2012 $59 Million

No.. they simply stopped publishing the LEO prices few customers were interested in.. replacing that with a "lowest price guarantee". The first prices they published around mid-2007 were:

A Falcon 9 (5m fairing) mission to LEO is $35M.

Falcon 9 missions to GTO are:

Satellite Vehicle Mass (kg)	Price
< 3500	$35M
3500-4500	$45M
4500-5000	$55M

All pricing is reflected in January 2007 US dollars.

With inflation, their prices haven't changed much at all.. what has changed is their marketing. The Falcon 1 experience showed that the interest in small satellites was overhyped and customers don't like being lured in with low prices that are inapplicable to the most common satellite mass/orbits.

For customers who actually do want a low mass satellite launched to LEO, all three of you, SpaceX is still the winner - call for best price

[mmeijeri]

And they are still finding out it takes more to do a launch

That's not knowable from publicly available information as the higher prices might simply reflect a shrinking uncertainty discount as Falcon slowly establishes a track record. You seem to know this is not the real reason because you have access to inside information, but maybe Blackjax didn't know that.

[Blackjax]

I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were. 

And they are still finding out it takes more to do a launch

Yes, and so the question still remains how much this learning process will impact their price by the time they eventually reach a point where they have enough F9 flight history to graduate up from unproven to proven.

[Luc]

I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were. 

Yes, and so the question still remains how much this learning process will impact their price by the time they eventually reach a point where they have enough F9 flight history to graduate up from unproven to proven.

Great discussion.  I would just like to reintroduce the distinction between price and cost.  Generally, price is NOT driven by cost in a sustainable business model.  SpaceX has every incentive to extract the highest price possible for every launch.  The fact that their manifest is filling faster than they can launch suggests their prices were too low, and they are taking appropriate action by raising prices. 

SpaceX cannot charge what ULA does for a launch, because their performance and risk profile doesn't match up.  As they establish a track record, their service will become more valuable enabling them to charge more.  This has nothing to do with their costs, but reflects the economic value they bring to their customers.  The difference between this and their costs is their margin and is what drives the business.

The more margin Elon can extract, the more he can invest in growing his business, expanding his product line, and realizing his vision.

Increasing prices from SpaceX are good news for their business and do not reflect a proportional (necessarily any) increase in costs, rather they indicate an increase in credibility and perceived value for SpaceX launch services.

[Jim]

I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were. 

Yes, and so the question still remains how much this learning process will impact their price by the time they eventually reach a point where they have enough F9 flight history to graduate up from unproven to proven.

Great discussion.  I would just like to reintroduce the distinction between price and cost.  Generally, price is NOT driven by cost in a sustainable business model.  SpaceX has every incentive to extract the highest price possible for every launch.  The fact that their manifest is filling faster than they can launch suggests their prices were too low, and they are taking appropriate action by raising prices. 

SpaceX cannot charge what ULA does for a launch, because their performance and risk profile doesn't match up.  As they establish a track record, their service will become more valuable enabling them to charge more.  This has nothing to do with their costs, but reflects the economic value they bring to their customers.  The difference between this and their costs is their margin and is what drives the business.

The more margin Elon can extract, the more he can invest in growing his business, expanding his product line, and realizing his vision.

Increasing prices from SpaceX are good news for their business and do not reflect a proportional (necessarily any) increase in costs, rather they indicate an increase in credibility and perceived value for SpaceX launch services.

Not true.  I am not refering to price in my posts.  Costs are increasing

[mmeijeri]

Costs are increasing

Are you telling us this is your (obviously expert) opinion or are you saying this is something you know to be a fact because you have inside information?

[Blackjax]

I'd suggest that it is possible that the thing driving the rise during that period was the fact that they were completely inexperienced during that timeframe and were lousy at estimating practically everything about the business they were trying to enter.  They might not be experienced even now, but they are much more so relative to where they were. 

Yes, and so the question still remains how much this learning process will impact their price by the time they eventually reach a point where they have enough F9 flight history to graduate up from unproven to proven.

Great discussion.  I would just like to reintroduce the distinction between price and cost. 

Good point.  I've been playing a little fast and loose in the course of the discussion with interchanging the terms, but as you point out, they are not the same thing and this is really about cost.  Mea culpa.  I think part of the reason it got sidetracked was that while we at least can guess at prices from publicly available information, costs are pretty difficult for any of us outside the companies to get a handle on (Jims potential access notwithstanding).  Prices tend to stand in as a proxy for cost but as you point out, they aren't really a trustworthy indicator.

Generally, price is NOT driven by cost in a sustainable business model. 

That is where I'd have to disagree.  There are a lot of workable different pricing strategies which depend heavily on your goals and how you want to position your company.  To make things even more complex, Elon is a philanthrocapitalist not a pure capitalist so his pricing strategy is influenced by goals that are somewhat different from what you'd see from a purely capitalist business venture.

SpaceX has every incentive to extract the highest price possible for every launch.  The fact that their manifest is filling faster than they can launch suggests their prices were too low, and they are taking appropriate action by raising prices. 

Given that his stated primary goal is to open up space and make humanity multiplanetary, I'd argue that his pricing strategy will reflect what he feels will best enable the realization of this goal, rather than pursuing one which simply maximizes profit.  Maximizing profit, which would then be available for reinvestment into achieving his goal is certainly one way to go about it, but there are other ways to do it and I think the evidence suggests that he has chosen to pursue one of those instead.  Every indication is that he is basing his strategy around attempting to generate a very high volume of launches and make a modest profit on each.  I think he is deliberately tying his prices to cost as a means to achieving his objective; he is trying to change the nature of the launch market.  In the short term he intends to do this by driving down cost and driving up launch volume to the maximum extent permitted by the use of expendables.  At the same time, he is pursuing a long term reusable strategy that (if successful, which is a big 'if' at this point) will follow on the heels of the expendable strategy and take advantage of the changes in the market that were prompted by much higher flight rates and lower launch costs.

I don't think you'll see him raise prices as SpaceX becomes more credible, I think you'll see them fall.  You see his backlog as driving his pricing strategy, but I see his pricing strategy as designed to produce that backlog, and not just in the short term while they are proving themselves.  The more heavily SpaceX gets booked, the more they are able to amortize costs across multiple launches, and the more experience they have to feed back into streamlining routine operations.  He wants a downward cost spiral driven by volume.  There is a distinct limit to how much this can help things in an industry like this, they aren't producing hubcaps here, but I think he intends to keep driving until he finds that limit, and plans to operate at it until he can figure out the reusable angle which will let him break through it.

I think he will trade margin for launch volume and market penetration, and consequently you'll see a relatively low margin pegged tightly to costs.  You don't shop around for additional launch sites when you've barely scratched the surface of using the ones you have if you were pursuing modest volume higher margin business, you do it if you expect to reach a point where you are running flat out and saturating the ones you already have.  (although I'll grant that there might be other considerations as well such as reaching different orbits, easier scheduling of launch windows, lower costs, ease of transport for the rockets to the site, etc.)

All of this is predicated on him successfully transitioning from an R&D shop to a reliable launch provider without dropping the ball and having sufficient launch failures to kill their credibility and/or available funds of course, but only time will tell whether he pulls it off.  It is also predicated on costs not rising steeply through this process, which is why I keep intently questioning Jim and others on this thread as to whether they see a reason why those costs would spike massively.  Early on Jim gave an answer that intensely interested me, but I haven't had any luck yet getting enough out of him to make heads or tails of it.

What interests me is considering the impact on the launch market if we arrive at 2016-2017 and he has managed to dodge the bullet and successfully launch a lot of that backlog.  What will happen to every other commercial launch provider out there that is not massively subsidized by a government?  I'm not saying it will happen, or even arguing that it is probable, just wondering what would occur if you dropped those considerations for a moment and simply speculated on what would happen if it did play out this way?  What happens if a company like SpaceX actually succeeds in driving expendable costs down to the practical limit, and then opts for a low margin?

[Jim]

Costs are increasing

Are you telling us this is your (obviously expert) opinion or are you saying this is something you know to be a fact because you have inside information?

Obvious things.  Touch and analysis labor are higher than predicted.   The vehicle design is not static and things keep happening.  Nozzle delams, thermal coatings, COLA analysis, etc.  What it is for this mission will be something different for the next and the one after it, etc.  A design or production issue found on one vehicle ripples through the fleet.  Increasing flight rates doesn't change this.

[Blackjax]

Costs are increasing

Are you telling us this is your (obviously expert) opinion or are you saying this is something you know to be a fact because you have inside information?

Obvious things.  Touch and analysis labor are higher than predicted.   The vehicle design is not static and things keep happening.  Nozzle delams, thermal coatings, COLA analysis, etc.  What it is for this mission will be something different for the next and the one after it, etc.  A design or production issue found on one vehicle ripples through the fleet.  Increasing flight rates doesn't change this.

Thank you.

Do you feel these are issues they can eventually get a handle on as they mature or will the remain ongoing problems indefinitely (if so, why?)?