8 ms·

You are absolutely spot on. The market isn’t competitive, it’s artificial highway robbery to even be in business. The entry requirements and expenses are insane

by Mo3 4y ago

You are absolutely spot on. The market isn’t competitive, it’s artificial highway robbery to even be in business. The entry requirements and expenses are insanely high, preventing a lot of competition to begin with, and the few players are free to drive up their prices to disgusting altitudes while providing services of disgusting quality. I wouldn’t even be surprised if they have agreements going on between themselves. SpaceX’s going to have a field day and brutally rip some inflated executives out of their cozy decade-old comfort zone.

walrus01 4y ago
To be fair, a non vertically integrated geostationary-satellite-owning company like intelsat, ses, eutelsat or arabsat or similar has little to no control over how much Boeing charges for a fully equipped 702 series satellite bus, or the disposable rocket launch costs.
- toomuchtodo 4y ago
  It’s incredible to behold. Can you imagine either being a satellite comms service provider or space vehicle provider trying to acquire or raise capital to acquire your compliment to vertically integrate and reap higher margins? You’ll get laughed out of the board room or the investment bank office. And instead, SpaceX knocks it out if the park with reusability such that they say to themselves (or rather, Musk tells the board) “well, we’re about to cannibalize the launch market and we’re running out of TAM, can we launch our own satellite constellation and consume another TAM with these F9s we’ve got laying around not being productive?”
  - shaklee3 4y ago
    geo companies don't care much about launch cost since it's infrequent, and SpaceX has not shown starlink has a path to be profitable. I know it's the cool thing to do to love SpaceX, but separate the launch from the satellites. the latter hasn't shown it's sustainable unless there's a large influx of government subsidies.
    - FeepingCreature 4y ago
      I'm just going to throw some numbers out here. edit: MASSIVE miscalculation fixed! Let's say they have 12k satellites. With oversubscription at 10? and a third of time over land? but 20gbps capacity for 200mbps connections, you get 333 users per satellite. 12k gives you 4 million users, at $100/mo or $1.2k/y. I'm going to drop that to $80/mo because Starlink need to pay for backhaul, so let's say $1k/y because it's round. So $4 billion annually. Over 12 years of satellite lifetime that's 48 billion. Satellites cost $300k to make, so subtract another 4 billion for production (44 remaining). Sats are launched in batches of 50, requiring 240 launches. Internal costs are somewhere between 30 to 60 million, it's unclear because of reuse, let's say 50 million for 12 billion launch costs, leaving 3 billion a year. And then there's some operational costs which they pay from that. So Iunno, it doesn't seem as extremely profitable as my first calc, but it's still probably pretty profitable. And any improvement they make to the satellites over time just adds on top. (Also I don't think they actually have $50 million internal cost per launch.) edit: Terminals "reportedly cost around $1000 to make" and are sold for $500, so nbd, subtract another 2 billion per customer-lifecycle.
      - plq 4y ago
        I came across this guy recently: https://m.youtube.com/watch?v=2vuMzGhc1cg&feature=youtu.be https://m.youtube.com/watch?v=2vuMzGhc1cg&feature=youtu.be Looks to me that you forgot about the consumer-side terminal.
        FeepingCreature 4y ago
        Yeah they make a loss on it, but probably not a huge one. Call it half a year to a year of fees. Can you tl;dw? I'm not watching 40 minutes of a video that has DEBUNKED in the title.
        plq 4y ago
        He claims the terminal costs at least 3× the retail price and will never make a profit because of it He also claims that its product offering brings nothing new to the table compared to hughesnet and viasat which is wrong imo as offering 1/10th latency of these products is a gamechanger. Sorry, I'd do better but I'm on mobile, I think it's worth a watch at 1.5×
steveoscaro 4y ago
This is SpaceX, not Tesla, unless I'm misreading your comment.
- Mo3 4y ago
  Thank you, I miswrote.
lotsofpulp 4y ago
Iridium’s profit margins do not seem like those of a company engaging in artificial highway robbery: https://www.macrotrends.net/stocks/charts/IRDM/iridium-communications-inc/profit-margins https://www.macrotrends.net/stocks/charts/IRDM/iridium-commu... Neither do Viasat’s: https://www.macrotrends.net/stocks/charts/VSAT/viasat/profit-margins https://www.macrotrends.net/stocks/charts/VSAT/viasat/profit... For some reason, Inmarsat has very nice profit margins though: https://craft.co/inmarsat/metrics https://craft.co/inmarsat/metrics Interesting that Viasat was able to purchase Inmarsat given the figures.
- Mo3 4y ago
  I would argue that 25% or so net margin for a decade is a pretty significant sign considering how small their customer base must be and how much expenses they must have. But yes, I did in fact assume it to be higher.
  - lotsofpulp 4y ago
    I see a lot of volatility for Iridium with quite a few years with big losses and zero profit. Viasat simply has near zero profit margins, and quite a few years with losses. Inmarsat looks like it has 20% or so profit margin for the last few years, but I could not quickly find more years of data. Also, I would expect decent (10%+) profit margins for a business with few customers and extremely costly barriers to entry. Both of those factors add to volatility, and investors would require a commensurate return to make it worth investing in.
    - Mo3 4y ago
      Iridium apparently had much more expenses for a few years around 2018, possibly mass upgrading their infrastructure, but before that a decade of near constant 20-30% net, recovering again now, unless I'm misreading this data.
      - lotsofpulp 4y ago
        The Mar 31, 2022 datapoint is -0.21%. They do make a good profit in the years they do, but my point is they also have quite a bit of volatility. I would not touch that business without the 10%+ profit margin opportunities.
jpgvm 4y ago
The problem is actually that most of those systems are on considerably less advanced tech than Starlink and as a result only have a fraction of the capacity. Thus each piece of capacity costs more.. thus the very high costs of Iridium and Viasat. Their profit margins aren't actually that good because their costs are so high compared to their capacity and the costs are so high that demand simply doesn't materialise - people just do without. Starlink will change this game because of their drastically increased capacity (assuming they get sat-sat links working). Until another mega-constellation comes online I fully expect them to do to satellite Internet what they did to the launch market.
- lxgr 4y ago
  Iridium was the first network to successfully operate inter-satellite links more than 20 years ago. I wouldn't call it "considerably less advanced". Iridium and Starlink operate in completely different bands (L vs Ka), with orders of magnitude more bandwidth available on Ka than on L. That (and the fleet size, which differs by 2-3 orders of magnitudes) is where the significantly lower bandwidth stems from.
  - jpgvm 4y ago
    Iridium was a marvel of engineering no-doubt but Starlink as a constellation is in a different league entirely. They also followed different engineering principles, Iridium was engineered to perfection while Starlink is hacked until it works and paper over the kinks with sheer scale and many iterations. Worth mentioning I have nothing but admiration for the original Iridium constellation, it was decades ahead of it's time, it's just so unfortunate they didn't see that broadband needs were going to dominate communications in time or maybe Motorola in it's original glory would still be around today.
    - walrus01 4y ago
      big difference also is that iridium was designed from the outset to address handheld size customer terminals like an original iridum 9505 phone, starlink is something that needs a considerably larger fixed phased array. rf laws of physics being what they are I don't see a ku/ka-band starlink handheld phone or anything similar to the iridium L/S-band hockey puck sized antennas any time soon. the business model was clearly not the best, as witnessed by its spectacular bankruptcy, and the acquisition by the 2nd corporate incarnation of iridium.
me_me_me 4y ago
> SpaceX’s going to have a field day and brutally rip some inflated executives out of their cozy decade-old comfort zone. Not if they have to replace 100's of satelites due to their 4 years life spawn. There are videos showing calculations and how crazy starlink is from business perspective. Money doesn't add up in long term.

by Mo3 4y ago

walrus01 4y ago

To be fair, a non vertically integrated geostationary-satellite-owning company like intelsat, ses, eutelsat or arabsat or similar has little to no control over how much Boeing charges for a fully equipped 702 series satellite bus, or the disposable rocket launch costs.

toomuchtodo 4y ago
It’s incredible to behold. Can you imagine either being a satellite comms service provider or space vehicle provider trying to acquire or raise capital to acquire your compliment to vertically integrate and reap higher margins? You’ll get laughed out of the board room or the investment bank office. And instead, SpaceX knocks it out if the park with reusability such that they say to themselves (or rather, Musk tells the board) “well, we’re about to cannibalize the launch market and we’re running out of TAM, can we launch our own satellite constellation and consume another TAM with these F9s we’ve got laying around not being productive?”
- shaklee3 4y ago
  geo companies don't care much about launch cost since it's infrequent, and SpaceX has not shown starlink has a path to be profitable. I know it's the cool thing to do to love SpaceX, but separate the launch from the satellites. the latter hasn't shown it's sustainable unless there's a large influx of government subsidies.
  - FeepingCreature 4y ago
    I'm just going to throw some numbers out here. edit: MASSIVE miscalculation fixed! Let's say they have 12k satellites. With oversubscription at 10? and a third of time over land? but 20gbps capacity for 200mbps connections, you get 333 users per satellite. 12k gives you 4 million users, at $100/mo or $1.2k/y. I'm going to drop that to $80/mo because Starlink need to pay for backhaul, so let's say $1k/y because it's round. So $4 billion annually. Over 12 years of satellite lifetime that's 48 billion. Satellites cost $300k to make, so subtract another 4 billion for production (44 remaining). Sats are launched in batches of 50, requiring 240 launches. Internal costs are somewhere between 30 to 60 million, it's unclear because of reuse, let's say 50 million for 12 billion launch costs, leaving 3 billion a year. And then there's some operational costs which they pay from that. So Iunno, it doesn't seem as extremely profitable as my first calc, but it's still probably pretty profitable. And any improvement they make to the satellites over time just adds on top. (Also I don't think they actually have $50 million internal cost per launch.) edit: Terminals "reportedly cost around $1000 to make" and are sold for $500, so nbd, subtract another 2 billion per customer-lifecycle.
    - plq 4y ago
      I came across this guy recently: https://m.youtube.com/watch?v=2vuMzGhc1cg&feature=youtu.be https://m.youtube.com/watch?v=2vuMzGhc1cg&feature=youtu.be Looks to me that you forgot about the consumer-side terminal.
      - FeepingCreature 4y ago
        Yeah they make a loss on it, but probably not a huge one. Call it half a year to a year of fees. Can you tl;dw? I'm not watching 40 minutes of a video that has DEBUNKED in the title.
        plq 4y ago
        He claims the terminal costs at least 3× the retail price and will never make a profit because of it He also claims that its product offering brings nothing new to the table compared to hughesnet and viasat which is wrong imo as offering 1/10th latency of these products is a gamechanger. Sorry, I'd do better but I'm on mobile, I think it's worth a watch at 1.5×

steveoscaro 4y ago

This is SpaceX, not Tesla, unless I'm misreading your comment.

Mo3 4y ago
Thank you, I miswrote.

lotsofpulp 4y ago

Iridium’s profit margins do not seem like those of a company engaging in artificial highway robbery: https://www.macrotrends.net/stocks/charts/IRDM/iridium-communications-inc/profit-margins https://www.macrotrends.net/stocks/charts/IRDM/iridium-commu... Neither do Viasat’s: https://www.macrotrends.net/stocks/charts/VSAT/viasat/profit-margins https://www.macrotrends.net/stocks/charts/VSAT/viasat/profit... For some reason, Inmarsat has very nice profit margins though: https://craft.co/inmarsat/metrics https://craft.co/inmarsat/metrics Interesting that Viasat was able to purchase Inmarsat given the figures.

Mo3 4y ago
I would argue that 25% or so net margin for a decade is a pretty significant sign considering how small their customer base must be and how much expenses they must have. But yes, I did in fact assume it to be higher.
- lotsofpulp 4y ago
  I see a lot of volatility for Iridium with quite a few years with big losses and zero profit. Viasat simply has near zero profit margins, and quite a few years with losses. Inmarsat looks like it has 20% or so profit margin for the last few years, but I could not quickly find more years of data. Also, I would expect decent (10%+) profit margins for a business with few customers and extremely costly barriers to entry. Both of those factors add to volatility, and investors would require a commensurate return to make it worth investing in.
  - Mo3 4y ago
    Iridium apparently had much more expenses for a few years around 2018, possibly mass upgrading their infrastructure, but before that a decade of near constant 20-30% net, recovering again now, unless I'm misreading this data.
    - lotsofpulp 4y ago
      The Mar 31, 2022 datapoint is -0.21%. They do make a good profit in the years they do, but my point is they also have quite a bit of volatility. I would not touch that business without the 10%+ profit margin opportunities.

jpgvm 4y ago

The problem is actually that most of those systems are on considerably less advanced tech than Starlink and as a result only have a fraction of the capacity. Thus each piece of capacity costs more.. thus the very high costs of Iridium and Viasat. Their profit margins aren't actually that good because their costs are so high compared to their capacity and the costs are so high that demand simply doesn't materialise - people just do without. Starlink will change this game because of their drastically increased capacity (assuming they get sat-sat links working). Until another mega-constellation comes online I fully expect them to do to satellite Internet what they did to the launch market.

lxgr 4y ago
Iridium was the first network to successfully operate inter-satellite links more than 20 years ago. I wouldn't call it "considerably less advanced". Iridium and Starlink operate in completely different bands (L vs Ka), with orders of magnitude more bandwidth available on Ka than on L. That (and the fleet size, which differs by 2-3 orders of magnitudes) is where the significantly lower bandwidth stems from.
- jpgvm 4y ago
  Iridium was a marvel of engineering no-doubt but Starlink as a constellation is in a different league entirely. They also followed different engineering principles, Iridium was engineered to perfection while Starlink is hacked until it works and paper over the kinks with sheer scale and many iterations. Worth mentioning I have nothing but admiration for the original Iridium constellation, it was decades ahead of it's time, it's just so unfortunate they didn't see that broadband needs were going to dominate communications in time or maybe Motorola in it's original glory would still be around today.
  - walrus01 4y ago
    big difference also is that iridium was designed from the outset to address handheld size customer terminals like an original iridum 9505 phone, starlink is something that needs a considerably larger fixed phased array. rf laws of physics being what they are I don't see a ku/ka-band starlink handheld phone or anything similar to the iridium L/S-band hockey puck sized antennas any time soon. the business model was clearly not the best, as witnessed by its spectacular bankruptcy, and the acquisition by the 2nd corporate incarnation of iridium.

me_me_me 4y ago

> SpaceX’s going to have a field day and brutally rip some inflated executives out of their cozy decade-old comfort zone. Not if they have to replace 100's of satelites due to their 4 years life spawn. There are videos showing calculations and how crazy starlink is from business perspective. Money doesn't add up in long term.