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

[Robotbeat]

As of right now, with 10 launches of a heavy RLV just halfway through the year, SpaceX is out-launching everyone else and with a big cost advantage. Their main competitors, ULA and Aerojet, have suffered multiple rounds of layoffs and/or mergers, with only half-measures for future competition.

SpaceX has ALREADY dramatically disrupted the launch market, and they're only just hitting their stride. I could easily see a >$50b valuation after getting a few Constellation sats launched and astronauts launched around the Moon. A lot of hype built into that, but they're riding that wave right now.

Valuations necessarily price-in planned accomplishments before they happen, discounted by the risk that they won't. So if everything else with constellation development goes to plan, and if SpaceX continues building their low-cost-launch moat, then their valuation will necessarily assume some good probability of success with the constellation before it even happens.

[Robotbeat]

but I think it's still an open question whether enough of the world wants/needs space-based internet service. Especially after Iridium upgrades their system to handle a lot of low-speed data needs.

I seriously doubt there's no market for high-speed, low-latency, ubiquitous fixed Internet with low installation costs. Whether it's "space-based" doesn't matter for consumers, so it doesn't make sense to limit your market size estimation ONLY on what can ONLY be addressed with a space-based solution. What they care about is if it's better or comparable to what they already have, which for the vast majority of people (i.e. People who don't live inside a data center) it is.

RE:Iridium:
Iridium NEXT is not playing in that field, and even if they marketed that way, the capability of Iridium NEXT will pale in comparison (but not, of course, for mobile).

If you need a highly mobile and compact internet hotspot or phone that can work anywhere in the world, Iridium is very good for you. But WAY too expensive and slow for a fixed broadband solution.

...which is fine. I'm sure Iridium NEXT will get plenty of subscribers. Its capacity will likely be fully subscribed.

[AncientU]

As of right now, with 10 launches of a heavy RLV just halfway through the year, SpaceX is out-launching everyone else and with a big cost advantage. Their main competitors, ULA and Aerojet, have suffered multiple rounds of layoffs and/or mergers, with only half-measures for future competition.

SpaceX has ALREADY dramatically disrupted the launch market, and they're only just hitting their stride. I could easily see a >$50b valuation after getting a few Constellation sats launched and astronauts launched around the Moon. A lot of hype built into that, but they're riding that wave right now.

Valuations necessarily price-in planned accomplishments before they happen, discounted by the risk that they won't. So if everything else with constellation development goes to plan, and if SpaceX continues building their low-cost-launch moat, then their valuation will necessarily assume some good probability of success with the constellation before it even happens.

Data back from a few test sats would solidify that plan -- these data should be available six to nine months into the future, so I wouldn't expect a capital raise until then.  At that point, assuming FCC licensing, fabrication facility can break ground, launch schedules should be outlined, and cash should flow freely.

[RedLineTrain]

I don't see how Elon can raise significant further capital for SpaceX without giving up his controlling share - I think his ownership sits at 57% at the moment or something like that.

According to a November 2016 FCC filing, Musk has 78% voting share.  So not a problem.

SpaceX is a privately held company in which the sole shareholder who is the beneficial owner of a 10% or greater interest is Elon Musk, as trustee of a private trust. Mr. Musk’s trust currently owns 54% of the outstanding stock of SpaceX and has voting control of 78% of the outstanding stock of SpaceX.

[Oli]

When the head of the company says unaffordable, it isn't relative.

Your estimate of 8% lumped 15 years of op expense in with the capital raise needed to get started. These are completely apples and oranges as far as starting a venture are concerned.  $492M launch costs are 17% of the up-front capital needs; doubling those costs make launch 30% of the capital required.  Business case likely didn't close with higher launch costs.

I lumped the up-front capital together with current op expense multiplied by 15. I obviously don't have the net present values of all future op expenses. What I did was a perfectly fine rough estimate given the lack of more data respectively time from my part.

As for "business case didn't close": The contract for Iridium NEXT was given to Thales in 2010. Back then the success of SpaceX was unknown.

[su27k]

When the head of the company says unaffordable, it isn't relative.

Your estimate of 8% lumped 15 years of op expense in with the capital raise needed to get started. These are completely apples and oranges as far as starting a venture are concerned.  $492M launch costs are 17% of the up-front capital needs; doubling those costs make launch 30% of the capital required.  Business case likely didn't close with higher launch costs.

I lumped the up-front capital together with current op expense multiplied by 15. I obviously don't have the net present values of all future op expenses. What I did was a perfectly fine rough estimate given the lack of more data respectively time from my part.

As for "business case didn't close": The contract for Iridium NEXT was given to Thales in 2010. Back then the success of SpaceX was unknown.

https://gigaom.com/2012/08/27/how-iridium-took-a-chance-on-spacex-and-won/

They started negotiation back in 2006, contract was signed right after first F9 launch since bankers insist on seeing a successful F9 flight before sending the money. It looks like Iridium only has a $3B budget for the whole project, so SpaceX's price is pretty important.

[woods170]

Because SpaceX has MUCH bigger plans than just launching 20 rockets a year. Try more like 200.

200 per year is simply fantasy.  Even 20 annually for more than a few years (as SpaceX clears its delayed backlog) is optimistic.

In all history only two launch vehicle families have managed to fly more than 20 times per year for any length of time:  R-7 (1960s-1990s) and Thor (1960s).  R-7 peaked at roughly 55 per year during the 1980s, but the payloads that drove that cadence (Cold War film return recon) are gone.  During this decade, all of the rockets in all of the world's countries combined have only managed an average of a bit less than 83 orbital attempts per year.

 - Ed Kyle

Thanks again for the statistical bar that SpaceX will be measured against.  50 or 100 launches of a powerful vehicle like F9 per year would put them in a class of their own.  Wait for it...

Show me the payloads...

[Semmel]

Thanks again for the statistical bar that SpaceX will be measured against.  50 or 100 launches of a powerful vehicle like F9 per year would put them in a class of their own.  Wait for it...

Show me the payloads...

Quite possible the magic internet constellation. Without that, I doubt that they will reach that many flights. But then again, new satellite manufacturers might grow like mushrooms after the rain once the price becomes low enough. At moment there is only speculation, but the options are there and not at all impossible.

[AncientU]

Thanks again for the statistical bar that SpaceX will be measured against.  50 or 100 launches of a powerful vehicle like F9 per year would put them in a class of their own.  Wait for it...

Show me the payloads...

Quite possible the magic internet constellation. Without that, I doubt that they will reach that many flights. But then again, new satellite manufacturers might grow like mushrooms after the rain once the price becomes low enough. At moment there is only speculation, but the options are there and not at all impossible.

The 4,425 LEO satellite constellation was stated by EM to require maybe 50 flights per year; this would be an indefinitely long term rate since the sats are nominally 5-7 year lifetime and replacements are needed as soon as the initial constellation is launched.  Add to this the SpaceX 7,500 VLEO sat constellation... and the 8,000 other satellites currently being proposed to FCC and other agencies.  Then enter the DoD (and other national defense agencies internationally) to play in the dis-aggregated assets game. 

OneWeb has already booked dozens of flights for their 800 sat constellation (more than a 50% increase in number of currently active sats) starting next year, Iridium is launching 77 sats on eight flights this and next year, so growth is appearing already.  Space tourism and other more cost-sensitive applications can follow the comms ventures which will lower the tab for all.

Go back to mass production of automobiles, or the advent of personal computers, or the internet and look at how unpredictable future market expansion can be.  Don't limit the possibilities to the traditional satellite market.

An example:
https://www.ncta.com/platform/wp-content/uploads/2014/05/growth-of-internet-of-things-hero-1024x585.jpg

[Robotbeat]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

[AncientU]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Could be true for initial deployment which is defined in FCC application as 1600 sats... expect these to be deployed over 2-4 years, so that matches EM's 'maybe 50' launches per year.  Real bottom line question is whether ConnX sats can pack all the tech needed into this small, low cost format.  Rapid iteration will be needed, so your 4-year lifetime is probably based on technology evolution, not hardware durability.

The market is there, even with only handling the internet of things which is growing at an annual pace equivalent to adding the entire Earth population each year. 

[Robotbeat]

If the satellites need to be larger, then that helps the launch rate argument in favor of a large RLV.

Mueller certainly seems to expect satellites to grow dramatically.

[guckyfan]

Mueller certainly seems to expect satellites to grow dramatically.

I noticed that with some surprise. Seems to indicate that they expect enormous data throughput.

[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?

What you're saying is that SpaceX has given up on inducing demand by lowering prices.

No, what I'm saying that SpaceX can capture a significantly larger market share even with their current prices (because they have already lowered them from what was the norm before), and lowering them further _today_ would not be beneficial to SpaceX.

[AncientU]

I expect them to come down a notch, maybe up to a 30% reduction to around $40-45M, between now and 2020.  Have to keep priming that pump -- and constellation revenue will (should) dwarf launch services, so diminishing dependence on launch for revenue, while building the launch manifest to unprecedented levels.

[M.E.T.]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Just to say that this launch volume is really them paying themselves to launch rockets. It's not externally sourced revenue. Basically, it is a necessary expense in order to generate revenue from the 3000 satellites in orbit.

The launches themselves generate zero revenue. It is the satellites that do so. So the only difference between them using another service provider to launch the satellites and them doing so themselves, is that they can do it cheaper, and thus reduce the cost of the satellite constellation, and up its profit margin. The launches themselves are not revenue generating at all.

[envy887]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Just to say that this launch volume is really them paying themselves to launch rockets. It's not externally sourced revenue. Basically, it is a necessary expense in order to generate revenue from the 3000 satellites in orbit.

The launches themselves generate zero revenue. It is the satellites that do so. So the only difference between them using another service provider to launch the satellites and them doing so themselves, is that they can do it cheaper, and thus reduce the cost of the satellite constellation, and up its profit margin. The launches themselves are not revenue generating at all.

The launches don't have to generate any revenue for the benefits of higher volume leading to lower costs to happen. As long as the revenue from the constellation is coming in to keep the company as a whole afloat, the launches simply have to happen and the marginal cost per launch will go down.

[M.E.T.]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Just to say that this launch volume is really them paying themselves to launch rockets. It's not externally sourced revenue. Basically, it is a necessary expense in order to generate revenue from the 3000 satellites in orbit.

The launches themselves generate zero revenue. It is the satellites that do so. So the only difference between them using another service provider to launch the satellites and them doing so themselves, is that they can do it cheaper, and thus reduce the cost of the satellite constellation, and up its profit margin. The launches themselves are not revenue generating at all.

The launches don't have to generate any revenue for the benefits of higher volume leading to lower costs to happen. As long as the revenue from the constellation is coming in to keep the company as a whole afloat, the launches simply have to happen and the marginal cost per launch will go down.

Yes, I agree. I was just pointing out that it all hinges on the satellite constellation bringing in money, and quickly. Else the launches just become a massive expense, no matter how large the volume is. If they have to spend 3 years launching satellites before the satellites start earning them revenue, the larger launch volume just means larger deficits during those three years, with no additional revenue coming in.

[AncientU]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Just to say that this launch volume is really them paying themselves to launch rockets. It's not externally sourced revenue. Basically, it is a necessary expense in order to generate revenue from the 3000 satellites in orbit.

The launches themselves generate zero revenue. It is the satellites that do so. So the only difference between them using another service provider to launch the satellites and them doing so themselves, is that they can do it cheaper, and thus reduce the cost of the satellite constellation, and up its profit margin. The launches themselves are not revenue generating at all.

Book keeping-wise, do they need to account for the launch 'prices' as income in one company sector and launch expenses in another?  Might be necessary for government launch pricing justification and/or capital market documentation...  I know zero about standard accounting practices.

[oldAtlas_Eguy]

SpaceX was originally planning 4 year operating lives for the satellites, which means 3000 satellites per year.

Assuming they're roughly the same as Iridium (meaning ~10 per launch), that means ~300 Falcon 9 equivalent launches per year.

If SpaceX's constellation works out, they'll have plenty of launch volume. Even enough for a larger and fully reusable vehicle to replace Falcon 9 and Heavy.

Just to say that this launch volume is really them paying themselves to launch rockets. It's not externally sourced revenue. Basically, it is a necessary expense in order to generate revenue from the 3000 satellites in orbit.

The launches themselves generate zero revenue. It is the satellites that do so. So the only difference between them using another service provider to launch the satellites and them doing so themselves, is that they can do it cheaper, and thus reduce the cost of the satellite constellation, and up its profit margin. The launches themselves are not revenue generating at all.

The launches don't have to generate any revenue for the benefits of higher volume leading to lower costs to happen. As long as the revenue from the constellation is coming in to keep the company as a whole afloat, the launches simply have to happen and the marginal cost per launch will go down.

Yes, I agree. I was just pointing out that it all hinges on the satellite constellation bringing in money, and quickly. Else the launches just become a massive expense, no matter how large the volume is. If they have to spend 3 years launching satellites before the satellites start earning them revenue, the larger launch volume just means larger deficits during those three years, with no additional revenue coming in.

The statement from SpaceX as to when the constellation would start returning revenue is when 800 to 1000 sats are deployed into a "solid" distributed constellation. After that the revenue from the constellation keeps paying for the remainder of the sat deployments. So this first set of up to 1000 sats has to be covered by investment funding. If sat cost is as high as $1M each with deployment at $1M each then SpaceX will need at least $2B in investments to deploy the constellation prior to being able to bootstrap.

At 25 sats per F9 flight at a cost of $25M per flight it will take a total of 40 flights to get to 1000 deployed sats. At a launch rate increase over the 25 launches of 20 they would deploy all 1000 sats in 2 years. Also this would practically double their launch rate all of which would be used boosters.If half of the first set of 25 is also used boosters then 33 used to 45 total is booster 74% reuse launches to 26% new launches. Each new booster flies at least 4 times total.

New booster build rate needs to be <=12 in order to be able to build 45 Upper Stages. What this means is that the current totakl costs of the manufacturing line for a build of 20 complete cores would still be the same costs but launch rate jumped up to 45. This means that the costs per launch in manufacturing average costs is <60% that of when only new cores were launched. At ~$40M/core (booster, US, and faring) in manufacturing costs that represents with this level of reuse an average manufacturing cost of $24M/launch. At where only 5 new boosters are manufactured and the launch rate is increased to the max rate of production of US (~60) then the average costs of manufacture / launch is $14M. That would be 12 uses per booster manufacture. That would represent a <$25M average cost to launch (internal to SpaceX on average).