Who will compete with SpaceX? The last two and next two years.

[Nomadd]

 Bids aren't just based on cost plus. They're based on how much you can charge and still get the contract. SpaceX has admitted they underbid CRS-1 and wished they'd bid higher. The published F9 price is irrelevant when you have to meet AF requirements. The difference between the two GPS bids is probably just the confidence of the folks who set the price.

[joek]

Ed - The conclusion on this board was that SpaceX bid two quotes for the 1st GPS launch contract and the lower bid was Horizontal Integration and the higher bid was for Vertical Integration.  The board also concluded that the lower bid was selected and it was for horizontal integration.  (Since the GPS Bus Supports both methods) 

Extremely odd to allow a bidder to provide more than one bid--so odd that unless someone can quote the RFP verbiage allowing such that I highly doubt it.  The norm is specifically to disallow such.

The requirements are not fungible or negotiable.  Bidder can't say "if you require X, the price is $Y, but if you want P, the prices is $Q, or hey, we can provide this cool capability S [which you didn't require] for $T".

Those sorts of shenanigans lead to all sorts of difficulties; for example, Boeing vs. Airbus USAF tanker bid.

[joek]

Bids aren't just based on cost plus. They're based on how much you can charge and still get the contract. SpaceX has admitted they underbid CRS-1 and wished they'd bid higher. The published F9 price is irrelevant when you have to meet AF requirements. The difference between the two GPS bids is probably just the confidence of the folks who set the price.

Or simply that SpaceX learned that GPS 1 is costing them more than expected.  Bidder is going to eat the difference if they bid below cost as these are firm-fixed-price (FPP) contracts.  (Except maybe some specific special services, but those "special studies" are generally covered under other contracts.)

[butters]

I think the future evolution of the launch industry will be dominated by the operators of the LEO comsat constellations. Communications services is the cash cow in this value chain, more so than the launch services and satellite manufacturers. I think we'll see more loyal if not outright vertical relationships between comsat operators and their launch services.

SpaceX is obviously going the vertical route in partnership with Google. Amazon is a massive stakeholder in the future of network infrastructure because of their cloud computing business and logistical asset-tracking needs, and it would be reasonable to assume that Jeff Bezos will use Blue Origin to his advantage. Zuckerberg is still doing the solar drone wifi thing, but he's another mega-billionaire with financial interests in global network infrastructure. Apple has a quarter trillion dollars of capital reserves.

I'm not saying that there's gonna be an iRocket available in rose gold. But it's no coincidence that it's two Internet billionaires who are leading the RLV revolution. They're the ones who want to radically transform connectivity AND have the money to do it. The 21st century pirates of Silicon Valley are going to be the kingmakers of launch services in the 2020s -- if they're not also the kings.

[joek]

The pecking order has always been those closest to the end-user have the highest revenues.  In this context it looks like (top to bottom):
1. Content/service providers (e.g., telecom, broadcast).
2. Ground system providers
3. Satellite operators
4. Satellite manufacturers
5. Launch service providers

Going to be very hard for others to compete on a broad basis at any level if their competitors own and operate the vast majority of the stack.  Which I expect Bezos and Musk are aiming for, based on how they have approached their other businesses.  Of course there will continue to be niche providers, but not with growth rates or revenue in the same class.

[Oli]

Remember when SpaceX said Falcon 9 would be priced at $35 million?

That price was quoted way back in 2007 for 3.1mT to GTO. As of 2008 they were quoting $35M for <3.5mT to GTO, but $55M for 4.5-5.5mT to GTO.

Today, which is 9 years later, they offer up to 5.5mT to GTO for $62M - they have simplified their pricing. That is a 13% increase over a 9 year period. Using the Inflation Calculator the cumulative rate of inflation was actually 13.7%, so SpaceX pricing has actually FALLEN over that 9 year period, not risen.

That's what the fact show.

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.

Going to be very hard for others to compete on a broad basis at any level if their competitors own and operate the vast majority of the stack.  Which I expect Bezos and Musk are aiming for, based on how they have approached their other businesses.

Actually Bezos said the opposite. He wants to provide the infrastructure (cheap launch).

[rakaydos]

Another article:

On Thursday last week, Airbus joint venture ArianeGroup (nee Airbus Safran Launchers) announced plans to develop an engine to power a new class of reusable rockets.

We don't know a whole lot about the new engine just yet, much less about whatever rocket it will power. But here's what we do know:

    Dubbed "Prometheus," the new engine is expected to be ready for testing in 2020 and could begin flying missions by 2030.
    It will cost at least $91 million to develop.
    Instead of liquid oxygen and liquid hydrogen, Prometheus will utilize a mixture of LOx and liquid methane for fuel, providing about 225,000 pounds of thrust at sea level.
    The engine will be reusable over the course of somewhere between five and 10 launches and will cost no more than $1.1 million per unit to produce, which would be just one-tenth the cost of the new single-use Vulcain 2.1 engine that ArianeGroup is developing to power its upcoming Ariane 6 rocket.

Thus, Prometheus promises to deal a one-two punch to ArianeGroup's space-launch cost, which is currently at least 20% cheaper per ton of payload than launches conducted by Boeing (NYSE:BA)-Lockheed Martin (NYSE:LMT) joint venture United Launch Alliance -- but nearly twice as expensive as what SpaceX charges. By recovering and reusing an engine after launch, ArianeGroup will be able to save the cost of building entirely new engines from scratch after each launch. At the same time, ArianeGroup plans to cut the absolute cost of the engine by 90%.

They dont have the engine designed yet. They never even used a Methane as fuel for an engine before. They want to develop it to flight ready in 13 years and the development cost best initial estimate is $91 million. And on top of that, despite not even having the design of the engine, it will (not 'is targeted to' or 'supposed to' but 'will') cost no more than $1.1 million.

I am sorry, as much as that sounds intriguing, that is bullsh*t.

@edit: is that really such a bad word that I have to mask it?

Why do you think it's bull? Europe has some very smart engineers, and they have access to all the same information we do, as well as everyything the L2 people know and more.

Specifically, these very smart people have heard a recorded skype call where SpaceX's head rocket designer explained that the secret of the Merlin 1D was that they eliminated most of the valves, using a technique that is common on smaller engines but difficult to scale. They explicitly blew up a lot of test hardware on the stand (high development costs) trying to get it to work, but now that they have eliminated expensive valves, their engines are not just incredibly cheap, but also more reliable. (less capable of going wrong)

I have confidence a goverment packed project to duplicate SpaceX's achievements will succede... eventually. The long timeline, to me, implies that they know this, and are pacing themselves accordingly.

[Radical_Ignorant]

Will we ever get to a point where a higher failure rate - on unmanned flights - becomes an acceptable price to pay for dramatically lower launch costs?

Say 5 failures in every 100 launches, but in exchange for an order of magnitude drop in launch costs?

5 percent is the overall current failure rate for orbital launch vehicles world-wide, expendable or not.  Falcon 9 has an 8 percent failure rate so far if AMOS 6 is included.  SpaceX will have to improve that rate no matter what it charges for a launch if it wants to compete with Arianespace and ULA, which have demonstrate 1-3% failure rates.

 - Ed Kyle

The better reliability of Ariane 5 compared to Falcon 9 comes courtesy of the former rocket having flown more often than the latter.

Now, let's do apples to apples:

- Ariane 5 suffered two (2) complete failures and two (2) partial failures in it's first 38 launches.
- Falcon 9 suffered two (2) complete failures and one (1) partial failures in it's first 38 launches.

So, comparing vehicle reliablity, based on a similar number of launches, the Falcon 9 is actually more reliable than Ariane 5 was back then. And that little fact becomes more remarkable considering that it took SpaceX just seven (7) years to do those 38 launches whereas it took 12 years for the first 38 launches of Ariane 5.

That comparison makes no sense. It's like saying work of this more experienced guy is not more reliable because he wasn't experienced always, so it doesn't hurt to hire some rookie. We are not comparing companies ability to learn and achieve reliability. We are talking reliability of vehicles here and now.

[Brovane]

It could be for the second GPS contract that the USAF selected Vertical Integration.  So the price difference of $13.8 M could be just the cost difference between Horizontal and Vertical. 

Do you think that SpaceX shouldn't charge more for Vertical Integration?

Do you have any information at all to support this, or is it just baseless speculation?

Relevant thread discussion - http://forum.nasaspaceflight.com/index.php?topic=33921.msg1525306#msg1525306

http://forum.nasaspaceflight.com/index.php?topic=40693.msg1558169#msg1558169

[spacenut]

From Oli

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.
[/quote]

SpaceX is still the lowest cost launch provider.  However, the costs will come down significantly once reuse takes hold.  It is just begining. 

[gongora]

It could be for the second GPS contract that the USAF selected Vertical Integration.  So the price difference of $13.8 M could be just the cost difference between Horizontal and Vertical. 

Do you think that SpaceX shouldn't charge more for Vertical Integration?

Do you have any information at all to support this, or is it just baseless speculation?

Relevant thread discussion - http://forum.nasaspaceflight.com/index.php?topic=33921.msg1525306#msg1525306

http://forum.nasaspaceflight.com/index.php?topic=40693.msg1558169#msg1558169

I didn't see anything there about Spacex doing vertical integration of GPS missions.

[woods170]

It could be for the second GPS contract that the USAF selected Vertical Integration.  So the price difference of $13.8 M could be just the cost difference between Horizontal and Vertical. 

Do you think that SpaceX shouldn't charge more for Vertical Integration?

Do you have any information at all to support this, or is it just baseless speculation?

Relevant thread discussion - http://forum.nasaspaceflight.com/index.php?topic=33921.msg1525306#msg1525306

http://forum.nasaspaceflight.com/index.php?topic=40693.msg1558169#msg1558169

I didn't see anything there about Spacex doing vertical integration of GPS missions.

That is correct. Because SpaceX is not doing vertical integration on GPS missions. It's not required.

[AncientU]

Keep in mind the ebb and flow of certain market segments. Feast/famine that always hits.

The benefit of reuse for "famine" is that you have less capital in play and you configure pricing to always net more small/medium payloads than anyone else, so you're able to reduce/stretch-out workforce hours and suppliers, pacing for a lower run rate instead of starving them.

Predict that 2020 will have three providers struggling to do 4-5 launches each. Costs will rise on all of them, and it will be hard to break even. That's when the "market reckoning" will hit. Some will just become SC providers.

Not really following you.  You certainly don't mean launch demand will fall to 12-15 per year, do you?
Please amplify on what you are predicting, including who you think those providers will be -- or at least the pool of candidate providers to which you refer.

[su27k]

Keep in mind the ebb and flow of certain market segments. Feast/famine that always hits.

The benefit of reuse for "famine" is that you have less capital in play and you configure pricing to always net more small/medium payloads than anyone else, so you're able to reduce/stretch-out workforce hours and suppliers, pacing for a lower run rate instead of starving them.

Predict that 2020 will have three providers struggling to do 4-5 launches each. Costs will rise on all of them, and it will be hard to break even. That's when the "market reckoning" will hit. Some will just become SC providers.

Not really following you.  You certainly don't mean launch demand will fall to 12-15 per year, do you?
Please amplify on what you are predicting, including who you think those providers will be -- or at least the pool of candidate providers to which you refer.

I think he was referring to commercial commsat launch market, there're signs that GEO commsat sales are slowing down, SSL already laid off some people.

[abaddon]

Keep in mind the ebb and flow of certain market segments. Feast/famine that always hits.

The benefit of reuse for "famine" is that you have less capital in play and you configure pricing to always net more small/medium payloads than anyone else, so you're able to reduce/stretch-out workforce hours and suppliers, pacing for a lower run rate instead of starving them.

Predict that 2020 will have three providers struggling to do 4-5 launches each. Costs will rise on all of them, and it will be hard to break even. That's when the "market reckoning" will hit. Some will just become SC providers.

Not really following you.  You certainly don't mean launch demand will fall to 12-15 per year, do you?
Please amplify on what you are predicting, including who you think those providers will be -- or at least the pool of candidate providers to which you refer.

There are more than three providers.  I believe he's saying that three [of the current set of] providers will be struggling.

[guckyfan]

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.

Fact is that Falcon was never intended to reduce cost by an order of magnitude. Elon Musk stated that Falcon is evolutionary change. The next generation will be revolutionary and reduce cost by an order of magnitude or more, over Falcon which is already very significant cheaper than the competition.

[gospacex]

I have confidence a goverment packed project to duplicate SpaceX's achievements will succede... eventually.

No, it won't. Sure, govt project can build a capable engine, but also a cheap one? Never happened before.

[AncientU]

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.

Fact is that Falcon was never intended to reduce cost by an order of magnitude. Elon Musk stated that Falcon is evolutionary change. The next generation will be revolutionary and reduce cost by an order of magnitude or more, over Falcon which is already very significant cheaper than the competition.

Since the comment is referring to Mars-required reduction, I do believe SpaceX has reduced (and is still further reducing) the cost over SLS/Orion by an order of magnitude.  Totally depends on who is doing the accounting and what answer they intend to obtain.  Clearly the next gen, Raptor-based system will be a few orders of magnitude cheaper and more capable than SLS -- it, like SLS is to be purpose-built for the Mars goal*.
 
Falcon was built for Earth orbit deliveries and as a reusability demonstration platform, so best to compare its cost per kg to the STS system.  Again, depends on who does the calculation.  YMMV

For those who think we should use heavily subsidized Proton/Soyuz as the comparison cost basis, USA isn't going to Mars on a Russian ride.

* Note that the on-orbit refueling capability again improves (by 1-2 orders of magnitude) the to-Mars reduction, but that will come later.

[gospacex]

Remember when SpaceX said Falcon 9 would be priced at $35 million?

That price was quoted way back in 2007 for 3.1mT to GTO. As of 2008 they were quoting $35M for <3.5mT to GTO, but $55M for 4.5-5.5mT to GTO.

Today, which is 9 years later, they offer up to 5.5mT to GTO for $62M - they have simplified their pricing. That is a 13% increase over a 9 year period. Using the Inflation Calculator the cumulative rate of inflation was actually 13.7%, so SpaceX pricing has actually FALLEN over that 9 year period, not risen.

That's what the fact show.

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.

True. And they will continue to not dramatically lower their prices.

As of now they already undercut *everyone* on price, except Soyuz (iirc 3 tons to GTO) and small launchers. With their current prices, they can't service all their potential customers yet, need to up the launch rate some x2.

Why on Earth would Musk voluntarily cut his revenue today by lowering prices even more?

[AbuSimbel]

Remember when SpaceX said Falcon 9 would be priced at $35 million?

That price was quoted way back in 2007 for 3.1mT to GTO. As of 2008 they were quoting $35M for <3.5mT to GTO, but $55M for 4.5-5.5mT to GTO.

Today, which is 9 years later, they offer up to 5.5mT to GTO for $62M - they have simplified their pricing. That is a 13% increase over a 9 year period. Using the Inflation Calculator the cumulative rate of inflation was actually 13.7%, so SpaceX pricing has actually FALLEN over that 9 year period, not risen.

That's what the fact show.

The facts also show that SpaceX is nowhere near reducing launch costs by an order of magnitude (ignoring the several orders of magnitude reduction required for Mars for the moment). It's all fugazi.

True. And they will continue to not dramatically lower their prices.

As of now they already undercut *everyone* on price, except Soyuz (iirc 3 tons to GTO) and small launchers. With their current prices, they can't service all their potential customers yet, need to up the launch rate some x2.

Why on Earth would Musk voluntarily cut his revenue today by lowering prices even more?

I don't know when they'll cut the selling price, but their margins grow with every reflight, given how even the first refurbishment cost them less than half the price of a new core. They're already recouping what it took to develop reusability, and remember they expect to be able to fly a used core the day after its previous mission in 2040 next year. Soon they should be able to operate et unprecedented volume and unprecedented cost, and it's not only a matter of competitiveness with other LPs, but it's crucial for the deployment of their constellation.