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> lots of people expect SpaceX to make a killing on Starlink What lots of people expect is kind of irrelevant... OneWeb going bankrupt suggests that profit mar

> lots of people expect SpaceX to make a killing on Starlink What lots of people expect is kind of irrelevant... OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst. Cheaper launch cost is not enough to change the business from to non-viable to hugely profitable. Who will be the customers of Starlink? Internet is a commodity for the average person, you can't make money in that market. This leaves special cases such as abandoned areas, airlines, ships, but that market is much smaller and it's unclear whether it can feed the massive capital costs of Starlink: launches, satellites, ground stations. Edit: Providing service to ships in the ocean could be a problem, because of the lack of ground stations.

shantara 7y ago
>OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst It's too early to speculate about profit margins before the company has finished launching its constellation and started providing a commercial service.
- gpm 7y ago
  It's the exact right time time to speculate about profit margins, if you don't have some idea of what their expected profit margins are you don't have any idea about whether or not you should invest in this endeavor.
lukevp 7y ago
I grew up in a rural area. We had dial-up for years until we got point to point wireless, which capped out at 1.5 mbps. 3 of my team members live in a rural area and have similar internet. They’re all waiting to throw money at spacex as soon as it goes live. There’s millions of people in the US like them that would sign up. My wife and I are planning to move further from the city, but one of our concerns is getting decent internet (we have symmetric gigabit fiber now). Also I don’t think you truly grasp the cost efficiencies spacex has and will achieve. Elon originally said that they could lower launch costs under $1m if the only cost was propellant and minor refurbs, compared to hundreds of millions. Even today their confirmed cost is 6x less than average [1]. This is not a 20% reduction or something. It is incredibly significant. one web was launching on other companies’ rockets, so that’s an additional disadvantage since spacex is only incurring the cost of the launch and no margin since there will be recovered from the internet service. [1]: https://www.google.com/amp/s/theconversation.com/amp/how-spacex-lowered-costs-and-reduced-barriers-to-space-112586 https://www.google.com/amp/s/theconversation.com/amp/how-spa...
- FpUser 7y ago
  "My wife and I are planning to move further from the city, but one of our concerns is getting decent internet (we have symmetric gigabit fiber now)." Exactly my situation. I have symmetric gigabit and due to a nature of my business requiring symmetric fat pipe I have to live in a city. The minute I could get that gigabit in a wilderness I am out.
  - leesalminen 7y ago
    FWIW, I’m founder and CTO of a SaaS company and moved from an apartment in the city with symmetric gigabit out to the country with a 20/10 connection. It definitely was an impactful change for us at first. I had to change some work workflows to do heavy network stuff on a remote machine. It took some time to refine and make (nearly) as efficient as doing it locally. I also had to sandbox all the streaming gadgets in the house and limit their bandwidth allowance. But, the key for me was to move to an area with a reputable, locally owned WISP. It took a couple years but I found it. My WISP is run by an ex-IBMer down the road from me. The network is rock solid and goes down less than Comcast. I’m 10ms away from the nearest Google PoP. Everything on the network is solar-first. These WISPs are out there and they make the decision to move to the country at lot easier. Keep an eye out! I’m out in Colorado- Email me if you want to know where to look around here for good internet in a rural area.
    - FpUser 7y ago
      Among the other things we do - we produce long 4K videos with production quality that we have to transfer elsewhere using the Internet. Traffic wise it dwarfs our programming needs and everything else and not much I can do about it.
  - battery_cowboy 7y ago
    Yep, if I can pay a few thousand less for my home each month in a rural area vs. a big city with good internet and still develop software from home on a good connection, I'll pay several hundred bucks, even a thousand bucks maybe, a month for space internet if I had to.
irjustin 7y ago
> Internet is a commodity for the average person, you can't make money in that market. This assumes that razor thin margins are bad, which is usually a safe assumption but in the case of Starlink, I say it's not open minded enough. To boot Starlink online requires a minimum cost for service area (sats), but once you've got that area booted, onboarding new customers is trivial (vs laying fiber, cable, digging holes). The user terminal is for each individual - "Looks like a thin, flat, round UFO on a stick."[0] If you were offered $40 per Gb/s would you switch, 30? 20? Personally I would switch because it's simply not f'ing Comcast. [0] https://www.businessinsider.sg/spacex-starlink-user-terminal-flat-round-ufo-stick-elon-musk-2020-1?r=US&IR=T https://www.businessinsider.sg/spacex-starlink-user-terminal...
- tialaramex 7y ago
  How about if the offer was $1000 plus $10 per Mb/s and the maximum is 10Mbps ? You would switch because you've imagined this service is magically cheaper and better, but now I say it'll be expensive and worse are you still enthusiastic? Providing network service is a utility, and so yes razor thin margins are typical and that's too bad. It does make very high capital investment (such as launching huge numbers of satellites every few years) difficult to stomach though. These projects (whatever Musk says about them when hyping his company) deliver expensive network access to places where it's otherwise not practical to offer service at all. They aren't going head-to-head with Comcast, or even with AOL, they're competing with "Physically take a day's / week's work to the A site where they have network access".
  - ghaff 7y ago
    >These projects (whatever Musk says about them when hyping his company) deliver expensive network access to places where it's otherwise not practical to offer service at all. They aren't going head-to-head with Comcast, or even with AOL, they're competing with "Physically take a day's / week's work to the A site where they have network access". Yeah, there are a lot of places in the US--some of which aren't even really all that rural--that just don't have good Internet options. Today, satellite basically falls into the slightly better than nothing category but it's neither price-competitive nor good if you have essentially any other option. While I know people in tech who make do with only a satellite connection, I'm sure many reading this wouldn't consider that viable and it will be increasingly less so over time. 5G will presumably help in some cases as it rolls out but it certainly won't reach everywhere. And, presumably, over time places that don't have a certain level of Internet access will be increasingly unsuitable at least for long-term residence.
jessriedel 7y ago
> OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst It suggests that investors didn't think that OneWeb would have sufficient profits. The example I gave suggest that investors think that Starlink and the new Iridium satellites will be profitable. The market for Starlink are the millions of people in rural and sparce suburban areas for whom internet connections are slow and expensive.
nickik 7y ago
> What lots of people expect is kind of irrelevant... OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst. Cheaper launch cost is not enough to change the business from to non-viable to hugely profitable. Your comment here is pure speculation. From everything we know, the problem for them was huge capital cost and massive required cashflow to buy launches. All that when your competition has the exact opposite situation totally vertically integrated from the rocket launch to the manufacturing of the whole satellite. Starlink has so far always gotten tons of money when they asked for it, suggesting the exact opposite of what you stated. OneWeb was just unlikely to get there.
- greglindahl 7y ago
  OneWeb was projected to need $7 billion to get to production usage, of which only $1 billion is the 21 Soyuz launches. The main killer is growth in the cost of their satellites (co-produced with Airbus) and ground stations.
InTheArena 7y ago
One web never made it to the point where revenue came in the first place, so you can’t really learn anything from one web, outside of satellites and rockets are expensive - both areas that spacex has a huge advantage in. A single contract from the US government that displaces their contracts with various providers could be profitable to spacex.
Thlom 7y ago
I think Elon has been talking about floating ground stations. Not sure if that is even viable. My best guess is that ships, at least ocean going ships, will stay with GEO operators for the time being.
- mrep 7y ago
  Starlink is planning on adding laser links to the satellites so that when one satellite is out of range of a ground station it can beam packets to other satellites that are in range of a ground station.
  - Thlom 7y ago
    As far as I understand none of the sats in orbit have this technology as of yet, so until they manage to make this a reality they will need a lot of ground stations, including floating ground station if they intend on serving the maritime market. Interesting times.

shantara 7y ago

>OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst It's too early to speculate about profit margins before the company has finished launching its constellation and started providing a commercial service.

gpm 7y ago
It's the exact right time time to speculate about profit margins, if you don't have some idea of what their expected profit margins are you don't have any idea about whether or not you should invest in this endeavor.

lukevp 7y ago

I grew up in a rural area. We had dial-up for years until we got point to point wireless, which capped out at 1.5 mbps. 3 of my team members live in a rural area and have similar internet. They’re all waiting to throw money at spacex as soon as it goes live. There’s millions of people in the US like them that would sign up. My wife and I are planning to move further from the city, but one of our concerns is getting decent internet (we have symmetric gigabit fiber now). Also I don’t think you truly grasp the cost efficiencies spacex has and will achieve. Elon originally said that they could lower launch costs under $1m if the only cost was propellant and minor refurbs, compared to hundreds of millions. Even today their confirmed cost is 6x less than average [1]. This is not a 20% reduction or something. It is incredibly significant. one web was launching on other companies’ rockets, so that’s an additional disadvantage since spacex is only incurring the cost of the launch and no margin since there will be recovered from the internet service. [1]: https://www.google.com/amp/s/theconversation.com/amp/how-spacex-lowered-costs-and-reduced-barriers-to-space-112586 https://www.google.com/amp/s/theconversation.com/amp/how-spa...

FpUser 7y ago
"My wife and I are planning to move further from the city, but one of our concerns is getting decent internet (we have symmetric gigabit fiber now)." Exactly my situation. I have symmetric gigabit and due to a nature of my business requiring symmetric fat pipe I have to live in a city. The minute I could get that gigabit in a wilderness I am out.
- leesalminen 7y ago
  FWIW, I’m founder and CTO of a SaaS company and moved from an apartment in the city with symmetric gigabit out to the country with a 20/10 connection. It definitely was an impactful change for us at first. I had to change some work workflows to do heavy network stuff on a remote machine. It took some time to refine and make (nearly) as efficient as doing it locally. I also had to sandbox all the streaming gadgets in the house and limit their bandwidth allowance. But, the key for me was to move to an area with a reputable, locally owned WISP. It took a couple years but I found it. My WISP is run by an ex-IBMer down the road from me. The network is rock solid and goes down less than Comcast. I’m 10ms away from the nearest Google PoP. Everything on the network is solar-first. These WISPs are out there and they make the decision to move to the country at lot easier. Keep an eye out! I’m out in Colorado- Email me if you want to know where to look around here for good internet in a rural area.
  - FpUser 7y ago
    Among the other things we do - we produce long 4K videos with production quality that we have to transfer elsewhere using the Internet. Traffic wise it dwarfs our programming needs and everything else and not much I can do about it.
- battery_cowboy 7y ago
  Yep, if I can pay a few thousand less for my home each month in a rural area vs. a big city with good internet and still develop software from home on a good connection, I'll pay several hundred bucks, even a thousand bucks maybe, a month for space internet if I had to.

irjustin 7y ago

> Internet is a commodity for the average person, you can't make money in that market. This assumes that razor thin margins are bad, which is usually a safe assumption but in the case of Starlink, I say it's not open minded enough. To boot Starlink online requires a minimum cost for service area (sats), but once you've got that area booted, onboarding new customers is trivial (vs laying fiber, cable, digging holes). The user terminal is for each individual - "Looks like a thin, flat, round UFO on a stick."[0] If you were offered $40 per Gb/s would you switch, 30? 20? Personally I would switch because it's simply not f'ing Comcast. [0] https://www.businessinsider.sg/spacex-starlink-user-terminal-flat-round-ufo-stick-elon-musk-2020-1?r=US&IR=T https://www.businessinsider.sg/spacex-starlink-user-terminal...

tialaramex 7y ago
How about if the offer was $1000 plus $10 per Mb/s and the maximum is 10Mbps ? You would switch because you've imagined this service is magically cheaper and better, but now I say it'll be expensive and worse are you still enthusiastic? Providing network service is a utility, and so yes razor thin margins are typical and that's too bad. It does make very high capital investment (such as launching huge numbers of satellites every few years) difficult to stomach though. These projects (whatever Musk says about them when hyping his company) deliver expensive network access to places where it's otherwise not practical to offer service at all. They aren't going head-to-head with Comcast, or even with AOL, they're competing with "Physically take a day's / week's work to the A site where they have network access".
- ghaff 7y ago
  >These projects (whatever Musk says about them when hyping his company) deliver expensive network access to places where it's otherwise not practical to offer service at all. They aren't going head-to-head with Comcast, or even with AOL, they're competing with "Physically take a day's / week's work to the A site where they have network access". Yeah, there are a lot of places in the US--some of which aren't even really all that rural--that just don't have good Internet options. Today, satellite basically falls into the slightly better than nothing category but it's neither price-competitive nor good if you have essentially any other option. While I know people in tech who make do with only a satellite connection, I'm sure many reading this wouldn't consider that viable and it will be increasingly less so over time. 5G will presumably help in some cases as it rolls out but it certainly won't reach everywhere. And, presumably, over time places that don't have a certain level of Internet access will be increasingly unsuitable at least for long-term residence.

jessriedel 7y ago

> OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst It suggests that investors didn't think that OneWeb would have sufficient profits. The example I gave suggest that investors think that Starlink and the new Iridium satellites will be profitable. The market for Starlink are the millions of people in rural and sparce suburban areas for whom internet connections are slow and expensive.

nickik 7y ago

> What lots of people expect is kind of irrelevant... OneWeb going bankrupt suggests that profit margins will be low at best, negative at worst. Cheaper launch cost is not enough to change the business from to non-viable to hugely profitable. Your comment here is pure speculation. From everything we know, the problem for them was huge capital cost and massive required cashflow to buy launches. All that when your competition has the exact opposite situation totally vertically integrated from the rocket launch to the manufacturing of the whole satellite. Starlink has so far always gotten tons of money when they asked for it, suggesting the exact opposite of what you stated. OneWeb was just unlikely to get there.

greglindahl 7y ago
OneWeb was projected to need $7 billion to get to production usage, of which only $1 billion is the 21 Soyuz launches. The main killer is growth in the cost of their satellites (co-produced with Airbus) and ground stations.

InTheArena 7y ago

One web never made it to the point where revenue came in the first place, so you can’t really learn anything from one web, outside of satellites and rockets are expensive - both areas that spacex has a huge advantage in. A single contract from the US government that displaces their contracts with various providers could be profitable to spacex.

Thlom 7y ago

I think Elon has been talking about floating ground stations. Not sure if that is even viable. My best guess is that ships, at least ocean going ships, will stay with GEO operators for the time being.

mrep 7y ago
Starlink is planning on adding laser links to the satellites so that when one satellite is out of range of a ground station it can beam packets to other satellites that are in range of a ground station.
- Thlom 7y ago
  As far as I understand none of the sats in orbit have this technology as of yet, so until they manage to make this a reality they will need a lot of ground stations, including floating ground station if they intend on serving the maritime market. Interesting times.