Last week’s analysis gently scoffed at ULA’s CEO’s suggestion that the U.S. government re-direct investment from “risky launch” to other areas. While having the government in charge of allocating any private money is a terrible idea, another big reason against it isn’t so obvious: the U.S. government truly isn’t that well-informed to allocate money in the space sector.
It would go along with industry and investor consensus (as well as focus on what it needs), not the best idea. The industry consensus itself is based on dubious forecasts and ideas that are touted as the best thing since the Everlasting Gobstopper--but aren’t quite. Thankfully, not everyone in the industry is content with rehashing the same old thing. But a majority are.
Anything you want to, do it?
Based on certain industry and investor forecasts and ideas, the space sector has become the land of unbounded opportunity--a magical place akin to Willy Wonka’s “Garden of Sweeten.” And who wouldn’t want to be a part of that? There are a lot of narratives in the space industry causing people to ignore common-sense because the narratives are so exciting and more importantly--appear enriching. Space exploration, space tourism, launch, smallsats, smallsat launch, Earth observation, LEO broadband, etc.--they all combine, typically under the guise of “New Space” to give people an incoherent but tantalizing space industry picture.
Of course, those same industrialists and investors pushing these narratives stand to gain a lot of money from people who are so excited about space, they don’t ask about the fundamentals. There are so many startups and companies copying these ideas that Willy Wonka’s industrial espionage enemy, Arthur Slugworth, looks nearly unimpeachable in comparison. While copying can lend itself to iterations that may be better than the original product/service, that’s not what’s happening in the space industry--at least not yet. In spite of investments and marketing, there is a lack of imagination in the space industry.
That the ideas being floated in the industry currently aren’t new was something I understood. That they all stem from ideas that benefit certain government organizations instead of consumers wasn’t obvious to me until I started conducting this analysis.
With a few exceptions, such as GPS applications or broadband communications, not one of these ideas can truly be said to be commercially affordable to the everyday consumer. What we want is an ecosystem like a Google or Apple smartphone application store—but for space. What we have is something else. Each idea investors and entrepreneurs are excited about can be traced back to U.S. military needs. The more fantastic ideas for space tourism and lunar activities can be traced to NASA goals. This realization started with a question.
A few weeks ago, an old friend of mine asked my opinion about the global space industry. He wanted to know what parts of it were overextended or overgrown. Instead of giving a snarky “Yes!” I sat back to think about the question and then responded. I don’t believe he’s the only one with that type of question, which is why I’m bringing forward his question and some of my responses below.
We’ll Begin with A Spin
The following list is that response and my reasons for each selection. I’ve expanded on my answers. It is not a comprehensive list--only an observation, my opinions in shorthand, of some of the significant industry trends:
Launch--primarily because of SpaceX. Gauging this is difficult because of SpaceX’s efforts with Starship/Super Heavy. Anyone getting in now should understand they must be working on a system more reliable, as capable, but less expensive to operate than at least the Falcon 9 (and that’s at a $28 million cost).
Simultaneously, this is a target-rich environment because certain companies are trying to keep launch prices high. If someone can undercut ULA and Northrop Grumman pricing for launching large launch vehicles reliably, then they should go for it.
Smallsat launch--Many companies throw hats in the ring here, maybe because they think smaller=less complex? There’s the smallsat market itself, which is growing. However, suppose most customers, such as universities and laboratories, are using smallsats because they can’t afford capital costs for larger satellites. In that case, they likely aren’t “high-value” customers for rocket launches either.
That said, many terrestrial companies rely on pennies from less well-to-do customers and successfully create profit. If a company can make a cheaper launch vehicle than, say, Rocket Lab, then there’s a decent chance--so long as that company can move fast and iterate successfully and quickly. And remember, SpaceX is keeping this industry honest with its Rideshare program.
Smallsats--Too many not bringing new capabilities to the table. The 3U cubesat form factor isn’t the best compromise. When I roamed the halls at SmallSat (in Logan, Utah), many manufacturers recommended 6U to customers because that form factor could support more power, power generation, optics, etc. Others offered much larger smallsat busses that were still reasonably affordable.
A bit more future-looking, but maybe pertinent: if Starship/Super Heavy come into being, while there will still be a need for smallsats, that launch system might make the concept of mass saving seem unnecessary, since per kg prices may be in the range of $10-50.
Ground systems--There are quite a few companies (big and small) involved in this, including one that’s attempting a sort of open-source scheduling of underused terrestrial terminals. Also, Amazon is going to make this tough with AWS Ground. Even Microsoft has gotten involved with Azure Orbital.
Not saying this couldn’t be improved, but the resources, global networking, flexibility, and growth with current technology those companies are bringing to bear in this sector are a formidable combination to challenge.
Earth observation/remote sensing--There are too many getting involved in optical and SAR who aren’t yet pushing the needle. Not so much for infrared or radio frequency “war-driving.” There may be more options for using the latter type of services if imagination is used.
Most EO companies, even the new ones, are relying on the government for some funding and not doing so great finding commercial markets. This reliance may indicate no real need, but more likely, the products they are producing are only appealing to governments.
So, there may be a chance here, but that chance will result only from the earnest study of the actual EO/RS market. It’s not just a matter of “Here’s our product, based on previous products that the government buys.” Or, “Here are our analytics services, which have been useful in the past to large organizations and governments.” Or, “Even if you can guess our prices for either, you’ll still pay more than you think.”
This needs to be an easily accessible and affordable product. Its utility needs to be obvious, not pushed. Data accessibility, as we’ve seen with something called the internet, helps build other businesses--many times ones never anticipated.
GPS--mainly in the smartphone app world. There are a lot of commercial apps for phones. For some reason, maybe because of equipment costs, agriculture (such as GPS-guided tractors/combines) is seen as low value.
There are other applications, though. Maybe there’s room for a “private GPS” constellation--one that’s even more accurate? But seven nations provide this service for free (or close to it), which would be challenging to complete. But it can be done--see Iridium with Aireon.
That was the initial list I provided to my friend.
Notice that five of the six parts mentioned above require building out or maturation of infrastructure? EO/RS and the GPS smartapps have more to do with data services/analytics--but they need infrastructure too: fast communications networks, satellites, ground architecture, etc.
All the above categories are of interest to U.S. military customers. Smallsats and smallsat launch are versions of the DoD’s interest in Operationally Responsive Space. A diversified national security launch portfolio, without too much launch-price consideration, is also desirable to the DoD. The same could be said for EO/RS satellites and ground system diversification. This situation shows there is still too much focus on “legacy” ideas in the newer space ecosystem. Pure imagination has been left out in the cold.
What We’ll See Will Defy Explanation
Maybe it’s time for moving away from military needs and perhaps offer products and services that are better suited for public use? Some people have tried that, with the list below reflecting what they think the public could use. Unfortunately, this list is full of ideas I consider over-hyped. Still, they are getting investment and attention:
- Commercial Crew--no real market--too expensive--too few customers. SpaceX can only do this because NASA paid for the development of the capsule. And it helps SpaceX build experience for Starship.
- Space tourism--ditto, except maybe it could grow into point-to-point travel?
- Commercial space stations--again, no real market and more expensive than just a ride up and down on a Falcon 9.
- Asteroid mining--not sure any of these guys (company founders) have ever worked in a mine on Earth. Not sure why they think it would be simpler on an asteroid. Also, tech development for asteroid mining would be more valuable than mining itself.
End of my answers to my friend.
All of the over-hyped ideas clearly benefit one organization—NASA. Fly people and stuff less expensively into space? Check. Get a new space station on orbit for (possibly) less expense than the ISS? Check. Figure out a way for humans to live on the Moon? Check. Is any of it affordable to the average working person? Um….
The fact that NASA is using commercial companies to build the things it needs doesn’t necessarily mean that what those companies build will be desirable to a consumer. Using commercial companies does not inherently create a “commercial market.” But it is smart of NASA to leverage commercial companies in a way to gain what it needs, and generally benefit humans with knowledge gained. Does NASA deliberately use terms such as "commercial" to confuse people? Maybe.
To be clear, the entire list wasn’t meant to discourage entry into any one of the categories. Rather, it was to show that if someone were to compete in any of those categories, then that someone better have a plan to make what they are doing magnitudes better than what’s either out there or on the books already. I didn’t even mention satellite broadband or satellite communications because they are old concepts and are saturated markets.
Time to compare the entire list of commercial space ideas with a different one--from students.
As some of you might know, I’m going through school right now. In one of the classes, the instructor throws a weekly topic for students to think over and then discuss. One of those discussions surrounded ideas for a possible commercial space business. As I went through my list above, I couldn’t help but compare it to the ideas the students were bringing forward.
To Compare with Pure Imagination...
To set the context and understand the level of expertise in these discussions, keep in mind these are students pursuing a master’s degree. Some of the students work in the space sector in some capacity. Some are interested in working in it. Some are interested in sector developments but aren’t really interested in joining the space sector. But the course is designed to complement an already busy person’s schedule.
The following is a generalized list of their ideas:
- Launch technology (an engine)
- Lunar/Mars dust mitigation
- Lunar “GPS”
- Space tourism
- Augmented reality
- Cellular Satcom
- 3D printing (in situ resource utilization)
- Infrared satellite fire detection
- On-orbit repair
- Lunar Outpost commercial initiatives
- 3D printing (launch vehicles)
Out of the twelve student ideas, five cover areas I consider overdone/over-hyped. However, the other seven ideas (bolded) are interesting. A few of them, such as on-orbit repair and 3D printing (of any kind), do have mindshare already. Whether any of these ideas are commercially viable would be a question for any of them (true of any business idea). But that particular criterion is not a requirement for the discussion.
Maybe not surprising as well is that nearly half of the bolded ideas (lunar outpost, dust mitigation, lunar GPS) work more towards NASA’s program efforts than the military’s. This indicates that there may be no commercial market for them and that the technology involved may be too expensive.
The point of comparing my list with the student’s ideas is for a few reasons.
First, there are people getting paid a lot of money to implement commercial space business ideas that aren’t even close to being unique, have proven yet to be profitable, or both. Part of this could be attributed to the ignorance of investors and entrepreneurs, which I would hope is not the case for industry participants. Part of it could be copying/parroting what others are saying because consensus can build security when it comes to investing.
Second, those same ideas are so obvious, so overdone, that unpaid, preoccupied (because of work and home), not-quite-in-the-mix students are not just identifying those ideas, but exceeding them. Some of the students came up with ideas different from the launch/smallsat/EO/space tourism flotsam some space entrepreneurs/consultants are floating.
The students’ ideas are different, but are they better than the ones continuously repackaged in the industry today? This space industry pushes the idea that the sky is not the limit, that innovation and pure imagination in science and exploration are the keys to humanity’s future among the stars. I would posit, however, that nearly every idea from the students was grounded in a reality that served an organization, and not necessarily humanity.
There is no fount of pure imagination just yet--that takes practice. The reality is that the hyped investment of recycled ideas mentioned above still only serves a select few. Yes, there are technology spinoffs, and GPS has become critical to most humans’ lives. But there are reasons why EO/RS companies are struggling, why the industry’s growth is relatively small when compared with the overall tech sector (look at Microsoft’s latest earnings). Those reasons have everything to do with who those ideas truly serve.
Students, entrepreneurs, and consultants need to visit the world of pure imagination a bit more often, but that's hard to do when "experts" consistently push another narrative--that of STEM (Science, Technology, Engineering, and Math) requirements. Maybe it's time for the missing "A" (arts) to help go beyond the needs of the government and the military. Some pure imagination may generate ideas more useful to humanity in real life.