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Why is this special to Amazon and SpaceX? Literally every vertical integrated company does what you said. That's the definition of vertical integration.

andrewljohnson 6y ago
Vertically integrating space logistics with space products is pretty cool.
- systemvoltage 6y ago
  Definitely!
ogre_codes 6y ago
A vertically integrated company owns increasing amounts of production of their end product. Apple is vertically integrated, they have products where they make the CPU, the device, the OS, and retail the devices. But ultimately they only sell the end products. If Apple were to start selling CPUs, you could argue that they had a similar model, but they don't (and won't because their CPUs are a competitive advantage). What Amazon and SpaceX are doing isn't vertical integration in the classic sense. While Amazon sells AWS, they also have an online retail platform. Their retail platform consumes AWS services. Similarly, SpaceX is both the supplier of launch services and the consumer of launch services. Amazon's retail operations are profitable, but by being their own best customer, they help Amazon drive profitability and demand for AWS.
- ethbr0 6y ago
  Flywheel integration is probably a better term. I.e. not vertically integrating for the supply of your current product, but in such a way that demand for both is increased.
  - scsilver 6y ago
    Ive heard fly wheel in regards to tech company strategy 3 times in a month, was there a conference I wasnt invited to?
    - grzm 6y ago
      It's not unlikely you're experiencing the Baader–Meinhof phenomenon. https://en.wikipedia.org/wiki/Frequency_illusion https://en.wikipedia.org/wiki/Frequency_illusion
    - jeffparsons 6y ago
      Jeff Bezos talks about it a lot. So it makes sense it would come up in the context of similarities between SpaceX's and Amazon's strategies.
    - xmprt 6y ago
      Same here. I'm guessing it's a term that's come up in a few popular posts here (especially considering Jeff Bezos left Amazon a few weeks ago and he talks about it a lot in his book and in general) and is not part of the vernacular of commenters here. Similar idea for other circles that you might have heard it in.
  - ogre_codes 6y ago
    Like this term a lot.
elihu 6y ago
What's different is that the entire commercial space launch business isn't very big. I think it's been somewhere in the ballpark of a couple dozen launches a year. SpaceX could conceivably satisfy it just by building one rocket and flying it over and over again. (Granted they don't have upper stage re-usability yet, and the Falcon 9 boosters have a limited lifespan, but they're working to get there with Starship.) So, if they want to have a viable business that involves a large fleet of reusable rockets they need to become their own customer to make sure the rockets don't just sit idle. Maybe this sort of thing happens all the time with new companies in new markets. The space launch market though has been around for a long time. To me it seems unusual for an industry that's been around for half a century or so to not be big enough to absorb the excess capacity of a newcomer.

andrewljohnson 6y ago

Vertically integrating space logistics with space products is pretty cool.

systemvoltage 6y ago
Definitely!

ogre_codes 6y ago

A vertically integrated company owns increasing amounts of production of their end product. Apple is vertically integrated, they have products where they make the CPU, the device, the OS, and retail the devices. But ultimately they only sell the end products. If Apple were to start selling CPUs, you could argue that they had a similar model, but they don't (and won't because their CPUs are a competitive advantage). What Amazon and SpaceX are doing isn't vertical integration in the classic sense. While Amazon sells AWS, they also have an online retail platform. Their retail platform consumes AWS services. Similarly, SpaceX is both the supplier of launch services and the consumer of launch services. Amazon's retail operations are profitable, but by being their own best customer, they help Amazon drive profitability and demand for AWS.

ethbr0 6y ago
Flywheel integration is probably a better term. I.e. not vertically integrating for the supply of your current product, but in such a way that demand for both is increased.
- scsilver 6y ago
  Ive heard fly wheel in regards to tech company strategy 3 times in a month, was there a conference I wasnt invited to?
  - grzm 6y ago
    It's not unlikely you're experiencing the Baader–Meinhof phenomenon. https://en.wikipedia.org/wiki/Frequency_illusion https://en.wikipedia.org/wiki/Frequency_illusion
  - jeffparsons 6y ago
    Jeff Bezos talks about it a lot. So it makes sense it would come up in the context of similarities between SpaceX's and Amazon's strategies.
  - xmprt 6y ago
    Same here. I'm guessing it's a term that's come up in a few popular posts here (especially considering Jeff Bezos left Amazon a few weeks ago and he talks about it a lot in his book and in general) and is not part of the vernacular of commenters here. Similar idea for other circles that you might have heard it in.
- ogre_codes 6y ago
  Like this term a lot.

elihu 6y ago

What's different is that the entire commercial space launch business isn't very big. I think it's been somewhere in the ballpark of a couple dozen launches a year. SpaceX could conceivably satisfy it just by building one rocket and flying it over and over again. (Granted they don't have upper stage re-usability yet, and the Falcon 9 boosters have a limited lifespan, but they're working to get there with Starship.) So, if they want to have a viable business that involves a large fleet of reusable rockets they need to become their own customer to make sure the rockets don't just sit idle. Maybe this sort of thing happens all the time with new companies in new markets. The space launch market though has been around for a long time. To me it seems unusual for an industry that's been around for half a century or so to not be big enough to absorb the excess capacity of a newcomer.