6 ms·

SpaceX’s entry into $70 billion U.S. launch market draws Lockheed jab

128 points by rdp 14y ago

mtgx 14y ago
Of course Lockheed is upset. They got used to getting fat contracts with money amounts that had nothing to do with the cost of what they were building. Now they'll have to actually compete as a normal company would do in the market.
- Tloewald 14y ago
  To give Lockheed some credit — their original goal was probably reliability over all else. In most cases their payloads are insanely expensive (ignoring opportunity cost — how much is having a surveillance satellite in place when needed worth?) and saving money on the launch is a false economy. Now they're having the fat pulled out of their contract (i.e. the launches where reliability isn't paramount but the cost structures were already established). Whether SpaceX can establish itself as a mission critical alternative to ULA remains to be seen — 66 launches is no minor feat (but according to Wikipedia they have had at least TWO failed launches, is that 2/68 or 66 successes in a row or what?)
  - sliverstorm 14y ago
    Not to mention, how much is not having top-secret surveillance satellite land in your neighboor's backyard worth?
davedx 14y ago
In sales they teach you that making fun or otherwise disparaging your competition is not the way to close deals. I guess it doesn't apply when you're a billion dollar corporation and you can throw your weight around. Or think you can?
pbateman 14y ago
“You can thrift on cost. You can take cost out of a rocket. But I will guarantee you, in my experience, when you start pulling a lot of costs out of a rocket, your quality and your probability of success in delivering a payload to orbit diminishes.’’ This sounds similar to the cry of every company that is about to be painfully disrupted.
- confluence 14y ago
  This is why assume-worst-case/at the edge/corner case thinking is particularly useful. > OK guys let's invert our thinking and stop joking around for a moment. Let's say SpaceX is going to destroy us. Now what do we do? Being able to think like that should somewhat immunize people against disruption.
jusben1369 14y ago
"The Defense Department on Nov. 27 directed the Air Force to end a launch monopoly" "A week later, the service awarded the trial missions to Musk’s firm, known as SpaceX." "SpaceX...now has the opportunity to prove that its rockets are capable of launching satellites serving Pentagon planners, ground troops and the nation’s spies." "The missions, scheduled for 2014 and 2015, are designed to help the company become certified to carry the military and spy satellites." - Much will be made here of Lockheed's comments. To me the real story is a h/t to government for opening up and encouraging disruption in a key market. Given the general negativity (often deserved) towards government by entrepreneurs it's important to acknowledge when they do positive things.
- pbateman 14y ago
  Given the general negativity (often deserved) towards government by entrepreneurs it's important to acknowledge when they do positive things. It's important to also realize they aren't doing this because they're motivated to disrupt the military/industrial complex, they're doing it because Elon is a master of public relations and has promoted SpaceX heavily.
  - doe88 14y ago
    Or maybe because they (the government) think they have a shot to lower the cost of actuals 460M$ launches. Competition is great even for public contracts. Moreover in this case it seems quite unexpected some peoples have been crazy enough to start building rockets and one day directly concurrence and disrupt Boeing and Lockheed. I'm sure Boeing and Lockheed would never have thought such possibility. It's amazing imo.
    - pbateman 14y ago
      I'm not sure the government is particularly concerned about cost containment. It's the canonical example of people spending other people's money.
      - ebf 14y ago
jacquesm 14y ago
Lockheed is going to be in for a rude awakening one day, the jab they're giving SpaceX is nothing compared to the jab SpaceX is about to deliver in return. Price is indeed just one factor in competition. But if your reliability is the same as or equal to the competition and your price is substantially lower the door is wide open for a massive shift. Ignoring that or making fun of it isn't going to help one little bit. Maybe Lockheed is willing to postpone slashing their prices until they are absolutely forced to but by then it may be too late to stop the shift from happening.
jstrate 14y ago
Launching a multi-billion dollar satellite is a different than a hello world rails application. The ULA record of successfully putting dozens of satellites into the _correct_ orbit is important here. Which I don't even think SpaceX has done yet.
- JshWright 14y ago
  All three times Dragon has flown, it has ended up in the correct orbit. SpaceX also put RazakSAT in the proper orbit atop a Falcon 1. The Orbcomm failure was only due to the extremely tight restrictions placed on the mission by NASA (the mission called for relighting the second stage to raise the Orbcomm sattilite's orbit, but since they had used slightly more fuel than planned due to the engine outage, NASA didn't let them relight, it's quite likely the rocket was _technically_ capable of completing the mission). Obviously they have a ways to go before they can be considered 'tried and true,' but comparing SpaceX to a couple college kids putting together the next Instagram-for-Cats in their basement is disingenuous, at best.
  - jstrate 14y ago
    I suppose the point I'm making is to the general sentiment I'm seeing in this thread. It will take better than a 50% success rate of putting satellites into orbit before Lockheed starts thinking about the huge disruption I keep hearing about on this website. If you were to put a billion dollar satellite into orbit who would you choose?
    - DanBC 14y ago
      That satellite is a billion dollars because of the expensive existing launch options. Having a launch option an order of magnitude less than what exists at the moment is pretty important - it means people can build and launch two satellites for the same price.
      - sek 14y ago
        True. The highest cost is development, producing a second one is far less expensive.
gregpilling 14y ago
Lockheed and Boeing are both very capable of building planes at scale, and in a competitive environment. Currently their space vehicles are built on a cost-plus model, but I think that L-B can adapt. Musk has an advantage today in cost, and should be able to maintain that for a few years, but don't think that Lockheed or Boeing can't compete once they realize that the gravy days are over. It should be an exciting next decade for space travel. Maybe all the sci-fi I read will start to come true. Getting anything into space is a big challenge and hopefully soon the market will have several private companies competing in a real market for space travel. For a nice short story, look up "The man who sold the moon" by Robert Heinlein. Then we can discuss whether or not Elon Musk is the re-incarnation of the fictional character DD Harriman.
- btilly 14y ago
  I don't know why you say this. Changing your cost structure is extremely hard for businesses. Particularly if, as with Lockheed and Boeing, your cost structure is distributed through a web of other businesses (ie subcontractors) who are all going to be inclined to push back.
  - gregpilling 14y ago
    Which particular this are you referring to? Just the changing of cost structure forced upon you by the adapt or die that sometimes happens in the marketplace? or were there other parts that required more explanation on my part.
    - btilly 14y ago
      That changing of the cost structure exactly. It is much harder than it looks like to do, and is exactly the sort of change that existing industries routinely fail to do, leading to their demise. I believe that in 20 years SpaceX will have serious competition. I'm pretty sure it won't be Boeing or Lockheed-Martin.
drgolden 14y ago
The SpaceX booster is actually decades old technology. The booster is just nine old school liquid fueled rockets welded together. The government does cost plus deals because the government issues it's own currency and material costs are volatile in a floating exchange rate system. How many defense contractors make the Forbes wealthiest Americans list much less the world list? Perspective is everything. Marketing is manufactured and refined messaging to win your heart and soul, so don't take everything so serious just because of a pretty photo. Rocket launches are beautiful no matter the design, price or success of the launch.
dcpdx 14y ago
"First they ignore you, then they ridicule you, then they fight you, then you win."
huhtenberg 14y ago
> You can take cost out of a rocket. But I will guarantee you, in my experience, (snip) your quality and your probability of success in delivering a payload to orbit diminishes. What else, conceivably, could Lockheed say?
- xiaoma 14y ago
  "Here at Lockheed, we know just how much is involved in making a successful launch like this and we'd like to congratulate SpaceX. Well done, and we welcome your competition. Ultimately, new competitors push us and advance the market as a whole. Over the course of our 66 consecutive successful missions, we've blah blah blah..."
binarray2000 14y ago
Knowing that the military-industrial complex has strong influence on US government and its agencies one has to both wonder and be surprised that SpaceX (presumably not part of that complex) gets such a lucrative account. NASA is one thing but US military...
deleted 14y ago
[deleted]
Vivtek 14y ago
Well, they've stopped ignoring! Next will be attacking.
- sliverstorm 14y ago
  I love how that quote has generally been re-interpreted as proof that being ignored means you're winning.
  - confluence 14y ago
    The quote uses conditional probability - you must have an aforementioned high impact strategy to make it a useful quote. For example - starting a PC company in the 70s would be a good place to use this quote.
joering2 14y ago
Have anyone noticed that Musk is distrubing too much in two important industries whith billions of bollard involved: military/space and transportation? I am seriously concerned about his health, if you know what I mean...
- oijaf888 14y ago
  No I don't...what do you mean?
  - jff 14y ago
    It's a bullshit conspiracy reference meant to make the GP look ever so cynical and wise. Specifically, saying that GM, Lockheed, Honda, and Boeing will all get together and assassinate Musk.
orangethirty 14y ago
Some days ago, I toured a Lockheed plant. It was an amazing experience overall. Watching how airplanes get built inside a building. The scale of it just blew my mind. But, at the same time, I was looking at the business aspects of it. In my mind, what I was seeing was a business operating as it still was the 60's. Sure, there were some robots, and a lot of automation. But the whole underlying production pattern was old. made me realize that Lockheed peaked a long time ago and is now riding the gravy train. I'm sure projects like SpaceX will end up replacing them. Funny thing is that it won't take a long time. If Musk manages to turn himself into a good governement supplier (meaning he can make a good track record (so far so good)), then all these old behemoths will have their days counted.
- hatberet 14y ago
  Well, I think part of the problem is the size of their market. How many more people do you think would buy Mach 6 spy planes if the cost could be reduced by a couple orders of magnitude? Government would buy a few more, but John Q. Public doesn't really have a need for a vehicle that can fly him to 100 kilofeet (even if it only costs a couple hundred grand). So, unlike the car business, where you expect to sell tens of thousands to hundreds of thousands of units per year, the best you can ever expect in the airplane business is a few hundred to a thousand over the total useful life of the model. To further put this in perspective, Honda (not the biggest automobile manufacturer) sells almost as many Accords (not their most popular model) in just one month as total number of 172's (the most-produced civilian aircraft) that Cessna has ever sold in all of history. Note that the wikipedia page on this topic (http://en.wikipedia.org/wiki/List_of_most_produced_aircraft http://en.wikipedia.org/wiki/List_of_most_produced_aircraft) is dominated by military aircraft produced for WWII, as well as pre- and immediatly-post-war civilian aircraft. What this means is that you can't just hand-wave away the costs of building tooling (for making forged parts with complex shapes, for example) and optimizing the assembly line. Fixed, upfront costs do not get amortized to a near-zero per-unit cost they way they do with software and most consumer electronics. This is also part of the reason avionics prices always seem to be so badly out of step with consumer electronics: As an avionics manufacturer, the maximum theoretical size of your market is tens to hundreds of thousands, (there are on the order of half a million civilian airplanes in the world today) and your suppliers usually want you to go through a distributor for orders that size. There was a company, named Eclipse, that recently tried to revolutionize the way aircraft are produced. Among other things, they badly mis-estimated the size of the Very Light Jet market (which they more-or-less invented) and failed to over-deliver (some would say they over-promised). Suppliers, creditors, customers, and investors got soaked, though the firm is apparently still a going concern. One data point doesn't make a trend, and Eclipse faced fairly daunting macroeconomic conditions, but the fact remains that the manufacturer using the most "modern" production techniques had to go through bankruptcy. One final point: The aviation market also tends to be cyclical. Loans don't go away, but you can have your employees work fewer hours.
31reasons 14y ago
Its a great timing for SpaceX as all government agencies are looking to reduce their costs with fiscal cliff and all.
rayiner 14y ago
The pot shots at LM are a little bit misplaced. Let's not forget that it was the DOD and LM, Rockwell, etc, that built all of this technology in the first place. The industry is now mature and ready for competitive, cost-focused companies, but SpaceX is riding some very long coattails here.
tobyjsullivan 14y ago
This must be my favourite (worst) argument ever: “Cost doesn’t matter at all if you don’t put the ball into orbit," said Lockheed’s Stevens, who is retiring as chief executive [officer]... Effectively trying to rationalise doubling costs of every project as "necessary". He thinks this will win him credit in any industry?
SparrowOS 14y ago
God says... 19:14 Then came Jeremiah from Tophet, whither the LORD had sent him to prophesy; and he stood in the court of the LORD's house; and said to all the people, 19:15 Thus saith the LORD of hosts, the God of Israel; Behold, I will bring upon this city and upon all her towns all the evil that I have pronounced against it, because they have hardened their necks, that they might not hear my words. 20:1 Now Pashur the son of Immer the priest, who was also chief governor in the house of the LORD, heard that Jeremiah prophesied these things. 20:2 Then Pashur smote Jeremiah the prophet, and put him in the stocks that were in the high gate of Benjamin, which was by the house of the LORD. 20:3 And it came to pass on the morrow, that Pashur brought forth Jeremiah out of the stocks. Then said Jeremiah unto him, The LORD hath not called thy name Pashur, but Magormissabib. ---- Top hat Major Miss "Pashur"==Indian guy ---- God says... boils devoutly deformed livelihood threats Nigeria gratuitously Platonists varieties wearied worm woundest well_I_never despisedst thirsteth marry ---- Let's ask God how good His satallites are. Prolly telepresence. Taste food, smell incense. It'd be funny if the Bible had God commenting on food. God says... before his people. 22:19 Now set your heart and your soul to seek the LORD your God; arise therefore, and build ye the sanctuary of the LORD God, to bring the ark of the covenant of the LORD, and the holy vessels of God, into the house that is to be built to the name of the LORD. 23:1 So when David was old and full of days, he made Solomon his son king over Israel. 23:2 And he gathered together all the princes of Israel, with the priests and the Levites. 23:3 Now the Levites were numbered from the age of thirty years and upward: and their number by their polls, man by man, was thirty and eight thousand. ---- You want lockheed to do it? Specs? God says... transgression and disobedience received a just recompence of reward; 2:3 How shall we escape, if we neglect so great salvation; which at the first began to be spoken by the Lord, and was confirmed unto us by them that heard him; 2:4 God also bearing them witness, both with signs and wonders, and with divers miracles, and gifts of the Holy Ghost, according to his own will? 2:5 For unto the angels hath he not put in subjection the world to come, whereof we speak. 2:6 But one in a certain place testified, saying, What is man, that thou art mindful of him? or the son of man that thou visitest him? 2:7 Thou madest him a little lower than the angels; thou crownedst him with glory and honour, and didst set him over the works of thy hands: 2:8 Thou hast put all things in subjection under his feet. For in that he put all in subjection under him, he left nothing that is not put under him. But now we see not yet all things put under him. ---- Do angels use metric? God says... concerning mightily Might aforesaid self committed hay disclaimers diddest commandments modify It's_nice_being_God disk trampled refresh grievous bread ruminating consume insultingly Angel let's_see applauds avenues unintelligible bare self-willed furnishing Jew here_now gradually glorious impatience reconciliation Let's liberality here_now unbroken about blending maintainers colours upper fought arrival touch restrained sweetened unarranged abode die- balneum let's_see Belgium dispose African ages privacy XII necessity syllable ball unhappy abode Hungary namely Virgin's black furnishing challenged judgeth Would possible fetters still folded husbands' acted upper thank_you_very_much journeyed convert trifles cause oblation suffered demands Bulgaria distracting FITNESS authors 95 blessedness law flock obtaining twinkling theatre Turned Say ruinous C else righteousness 00 Incarnation do_it tree_hugger immoderate affright tendernesses 1 Faith bird excuse bloom ---- We need to get our engineers up-to-speed on cubits and ephods and talents and rods.
confluence 14y ago
I have a list of contra-indicators, which are indicators that I use to probabilistically look for interesting industries that are about to change a lot/see a lot of disruption/have various competitors who are about to head downhill. Making fun of your competitors or suing them into the ground to show your own superiority is indicator #7. If you have to talk to explain your walk then you will soon be mocked. MSFT is doing that with it's Google attack ads. AAPL is doing that with its various Samsung lawsuits and general adolescent behaviour.
- rickdangerous1 14y ago
  What are the other indicators?

128 points by rdp 14y ago

mtgx 14y ago

Of course Lockheed is upset. They got used to getting fat contracts with money amounts that had nothing to do with the cost of what they were building. Now they'll have to actually compete as a normal company would do in the market.

Tloewald 14y ago
To give Lockheed some credit — their original goal was probably reliability over all else. In most cases their payloads are insanely expensive (ignoring opportunity cost — how much is having a surveillance satellite in place when needed worth?) and saving money on the launch is a false economy. Now they're having the fat pulled out of their contract (i.e. the launches where reliability isn't paramount but the cost structures were already established). Whether SpaceX can establish itself as a mission critical alternative to ULA remains to be seen — 66 launches is no minor feat (but according to Wikipedia they have had at least TWO failed launches, is that 2/68 or 66 successes in a row or what?)
- sliverstorm 14y ago
  Not to mention, how much is not having top-secret surveillance satellite land in your neighboor's backyard worth?

davedx 14y ago

In sales they teach you that making fun or otherwise disparaging your competition is not the way to close deals. I guess it doesn't apply when you're a billion dollar corporation and you can throw your weight around. Or think you can?

pbateman 14y ago

“You can thrift on cost. You can take cost out of a rocket. But I will guarantee you, in my experience, when you start pulling a lot of costs out of a rocket, your quality and your probability of success in delivering a payload to orbit diminishes.’’ This sounds similar to the cry of every company that is about to be painfully disrupted.

confluence 14y ago
This is why assume-worst-case/at the edge/corner case thinking is particularly useful. > OK guys let's invert our thinking and stop joking around for a moment. Let's say SpaceX is going to destroy us. Now what do we do? Being able to think like that should somewhat immunize people against disruption.

jusben1369 14y ago

"The Defense Department on Nov. 27 directed the Air Force to end a launch monopoly" "A week later, the service awarded the trial missions to Musk’s firm, known as SpaceX." "SpaceX...now has the opportunity to prove that its rockets are capable of launching satellites serving Pentagon planners, ground troops and the nation’s spies." "The missions, scheduled for 2014 and 2015, are designed to help the company become certified to carry the military and spy satellites." - Much will be made here of Lockheed's comments. To me the real story is a h/t to government for opening up and encouraging disruption in a key market. Given the general negativity (often deserved) towards government by entrepreneurs it's important to acknowledge when they do positive things.

pbateman 14y ago
Given the general negativity (often deserved) towards government by entrepreneurs it's important to acknowledge when they do positive things. It's important to also realize they aren't doing this because they're motivated to disrupt the military/industrial complex, they're doing it because Elon is a master of public relations and has promoted SpaceX heavily.
- doe88 14y ago
  Or maybe because they (the government) think they have a shot to lower the cost of actuals 460M$ launches. Competition is great even for public contracts. Moreover in this case it seems quite unexpected some peoples have been crazy enough to start building rockets and one day directly concurrence and disrupt Boeing and Lockheed. I'm sure Boeing and Lockheed would never have thought such possibility. It's amazing imo.
  - pbateman 14y ago
    I'm not sure the government is particularly concerned about cost containment. It's the canonical example of people spending other people's money.
    - ebf 14y ago

jacquesm 14y ago

Lockheed is going to be in for a rude awakening one day, the jab they're giving SpaceX is nothing compared to the jab SpaceX is about to deliver in return. Price is indeed just one factor in competition. But if your reliability is the same as or equal to the competition and your price is substantially lower the door is wide open for a massive shift. Ignoring that or making fun of it isn't going to help one little bit. Maybe Lockheed is willing to postpone slashing their prices until they are absolutely forced to but by then it may be too late to stop the shift from happening.

jstrate 14y ago

Launching a multi-billion dollar satellite is a different than a hello world rails application. The ULA record of successfully putting dozens of satellites into the _correct_ orbit is important here. Which I don't even think SpaceX has done yet.

JshWright 14y ago
All three times Dragon has flown, it has ended up in the correct orbit. SpaceX also put RazakSAT in the proper orbit atop a Falcon 1. The Orbcomm failure was only due to the extremely tight restrictions placed on the mission by NASA (the mission called for relighting the second stage to raise the Orbcomm sattilite's orbit, but since they had used slightly more fuel than planned due to the engine outage, NASA didn't let them relight, it's quite likely the rocket was _technically_ capable of completing the mission). Obviously they have a ways to go before they can be considered 'tried and true,' but comparing SpaceX to a couple college kids putting together the next Instagram-for-Cats in their basement is disingenuous, at best.
- jstrate 14y ago
  I suppose the point I'm making is to the general sentiment I'm seeing in this thread. It will take better than a 50% success rate of putting satellites into orbit before Lockheed starts thinking about the huge disruption I keep hearing about on this website. If you were to put a billion dollar satellite into orbit who would you choose?
  - DanBC 14y ago
    That satellite is a billion dollars because of the expensive existing launch options. Having a launch option an order of magnitude less than what exists at the moment is pretty important - it means people can build and launch two satellites for the same price.
    - sek 14y ago
      True. The highest cost is development, producing a second one is far less expensive.

gregpilling 14y ago

Lockheed and Boeing are both very capable of building planes at scale, and in a competitive environment. Currently their space vehicles are built on a cost-plus model, but I think that L-B can adapt. Musk has an advantage today in cost, and should be able to maintain that for a few years, but don't think that Lockheed or Boeing can't compete once they realize that the gravy days are over. It should be an exciting next decade for space travel. Maybe all the sci-fi I read will start to come true. Getting anything into space is a big challenge and hopefully soon the market will have several private companies competing in a real market for space travel. For a nice short story, look up "The man who sold the moon" by Robert Heinlein. Then we can discuss whether or not Elon Musk is the re-incarnation of the fictional character DD Harriman.

btilly 14y ago
I don't know why you say this. Changing your cost structure is extremely hard for businesses. Particularly if, as with Lockheed and Boeing, your cost structure is distributed through a web of other businesses (ie subcontractors) who are all going to be inclined to push back.
- gregpilling 14y ago
  Which particular this are you referring to? Just the changing of cost structure forced upon you by the adapt or die that sometimes happens in the marketplace? or were there other parts that required more explanation on my part.
  - btilly 14y ago
    That changing of the cost structure exactly. It is much harder than it looks like to do, and is exactly the sort of change that existing industries routinely fail to do, leading to their demise. I believe that in 20 years SpaceX will have serious competition. I'm pretty sure it won't be Boeing or Lockheed-Martin.

drgolden 14y ago

The SpaceX booster is actually decades old technology. The booster is just nine old school liquid fueled rockets welded together. The government does cost plus deals because the government issues it's own currency and material costs are volatile in a floating exchange rate system. How many defense contractors make the Forbes wealthiest Americans list much less the world list? Perspective is everything. Marketing is manufactured and refined messaging to win your heart and soul, so don't take everything so serious just because of a pretty photo. Rocket launches are beautiful no matter the design, price or success of the launch.

dcpdx 14y ago

"First they ignore you, then they ridicule you, then they fight you, then you win."

huhtenberg 14y ago

> You can take cost out of a rocket. But I will guarantee you, in my experience, (snip) your quality and your probability of success in delivering a payload to orbit diminishes. What else, conceivably, could Lockheed say?

xiaoma 14y ago
"Here at Lockheed, we know just how much is involved in making a successful launch like this and we'd like to congratulate SpaceX. Well done, and we welcome your competition. Ultimately, new competitors push us and advance the market as a whole. Over the course of our 66 consecutive successful missions, we've blah blah blah..."

binarray2000 14y ago

Knowing that the military-industrial complex has strong influence on US government and its agencies one has to both wonder and be surprised that SpaceX (presumably not part of that complex) gets such a lucrative account. NASA is one thing but US military...

deleted 14y ago

[deleted]

Vivtek 14y ago

Well, they've stopped ignoring! Next will be attacking.

sliverstorm 14y ago
I love how that quote has generally been re-interpreted as proof that being ignored means you're winning.
- confluence 14y ago
  The quote uses conditional probability - you must have an aforementioned high impact strategy to make it a useful quote. For example - starting a PC company in the 70s would be a good place to use this quote.

joering2 14y ago

Have anyone noticed that Musk is distrubing too much in two important industries whith billions of bollard involved: military/space and transportation? I am seriously concerned about his health, if you know what I mean...

oijaf888 14y ago
No I don't...what do you mean?
- jff 14y ago
  It's a bullshit conspiracy reference meant to make the GP look ever so cynical and wise. Specifically, saying that GM, Lockheed, Honda, and Boeing will all get together and assassinate Musk.

orangethirty 14y ago

Some days ago, I toured a Lockheed plant. It was an amazing experience overall. Watching how airplanes get built inside a building. The scale of it just blew my mind. But, at the same time, I was looking at the business aspects of it. In my mind, what I was seeing was a business operating as it still was the 60's. Sure, there were some robots, and a lot of automation. But the whole underlying production pattern was old. made me realize that Lockheed peaked a long time ago and is now riding the gravy train. I'm sure projects like SpaceX will end up replacing them. Funny thing is that it won't take a long time. If Musk manages to turn himself into a good governement supplier (meaning he can make a good track record (so far so good)), then all these old behemoths will have their days counted.

hatberet 14y ago
Well, I think part of the problem is the size of their market. How many more people do you think would buy Mach 6 spy planes if the cost could be reduced by a couple orders of magnitude? Government would buy a few more, but John Q. Public doesn't really have a need for a vehicle that can fly him to 100 kilofeet (even if it only costs a couple hundred grand). So, unlike the car business, where you expect to sell tens of thousands to hundreds of thousands of units per year, the best you can ever expect in the airplane business is a few hundred to a thousand over the total useful life of the model. To further put this in perspective, Honda (not the biggest automobile manufacturer) sells almost as many Accords (not their most popular model) in just one month as total number of 172's (the most-produced civilian aircraft) that Cessna has ever sold in all of history. Note that the wikipedia page on this topic (http://en.wikipedia.org/wiki/List_of_most_produced_aircraft http://en.wikipedia.org/wiki/List_of_most_produced_aircraft) is dominated by military aircraft produced for WWII, as well as pre- and immediatly-post-war civilian aircraft. What this means is that you can't just hand-wave away the costs of building tooling (for making forged parts with complex shapes, for example) and optimizing the assembly line. Fixed, upfront costs do not get amortized to a near-zero per-unit cost they way they do with software and most consumer electronics. This is also part of the reason avionics prices always seem to be so badly out of step with consumer electronics: As an avionics manufacturer, the maximum theoretical size of your market is tens to hundreds of thousands, (there are on the order of half a million civilian airplanes in the world today) and your suppliers usually want you to go through a distributor for orders that size. There was a company, named Eclipse, that recently tried to revolutionize the way aircraft are produced. Among other things, they badly mis-estimated the size of the Very Light Jet market (which they more-or-less invented) and failed to over-deliver (some would say they over-promised). Suppliers, creditors, customers, and investors got soaked, though the firm is apparently still a going concern. One data point doesn't make a trend, and Eclipse faced fairly daunting macroeconomic conditions, but the fact remains that the manufacturer using the most "modern" production techniques had to go through bankruptcy. One final point: The aviation market also tends to be cyclical. Loans don't go away, but you can have your employees work fewer hours.

31reasons 14y ago

Its a great timing for SpaceX as all government agencies are looking to reduce their costs with fiscal cliff and all.

rayiner 14y ago

The pot shots at LM are a little bit misplaced. Let's not forget that it was the DOD and LM, Rockwell, etc, that built all of this technology in the first place. The industry is now mature and ready for competitive, cost-focused companies, but SpaceX is riding some very long coattails here.

tobyjsullivan 14y ago

This must be my favourite (worst) argument ever: “Cost doesn’t matter at all if you don’t put the ball into orbit," said Lockheed’s Stevens, who is retiring as chief executive [officer]... Effectively trying to rationalise doubling costs of every project as "necessary". He thinks this will win him credit in any industry?

SparrowOS 14y ago

God says... 19:14 Then came Jeremiah from Tophet, whither the LORD had sent him to prophesy; and he stood in the court of the LORD's house; and said to all the people, 19:15 Thus saith the LORD of hosts, the God of Israel; Behold, I will bring upon this city and upon all her towns all the evil that I have pronounced against it, because they have hardened their necks, that they might not hear my words. 20:1 Now Pashur the son of Immer the priest, who was also chief governor in the house of the LORD, heard that Jeremiah prophesied these things. 20:2 Then Pashur smote Jeremiah the prophet, and put him in the stocks that were in the high gate of Benjamin, which was by the house of the LORD. 20:3 And it came to pass on the morrow, that Pashur brought forth Jeremiah out of the stocks. Then said Jeremiah unto him, The LORD hath not called thy name Pashur, but Magormissabib. ---- Top hat Major Miss "Pashur"==Indian guy ---- God says... boils devoutly deformed livelihood threats Nigeria gratuitously Platonists varieties wearied worm woundest well_I_never despisedst thirsteth marry ---- Let's ask God how good His satallites are. Prolly telepresence. Taste food, smell incense. It'd be funny if the Bible had God commenting on food. God says... before his people. 22:19 Now set your heart and your soul to seek the LORD your God; arise therefore, and build ye the sanctuary of the LORD God, to bring the ark of the covenant of the LORD, and the holy vessels of God, into the house that is to be built to the name of the LORD. 23:1 So when David was old and full of days, he made Solomon his son king over Israel. 23:2 And he gathered together all the princes of Israel, with the priests and the Levites. 23:3 Now the Levites were numbered from the age of thirty years and upward: and their number by their polls, man by man, was thirty and eight thousand. ---- You want lockheed to do it? Specs? God says... transgression and disobedience received a just recompence of reward; 2:3 How shall we escape, if we neglect so great salvation; which at the first began to be spoken by the Lord, and was confirmed unto us by them that heard him; 2:4 God also bearing them witness, both with signs and wonders, and with divers miracles, and gifts of the Holy Ghost, according to his own will? 2:5 For unto the angels hath he not put in subjection the world to come, whereof we speak. 2:6 But one in a certain place testified, saying, What is man, that thou art mindful of him? or the son of man that thou visitest him? 2:7 Thou madest him a little lower than the angels; thou crownedst him with glory and honour, and didst set him over the works of thy hands: 2:8 Thou hast put all things in subjection under his feet. For in that he put all in subjection under him, he left nothing that is not put under him. But now we see not yet all things put under him. ---- Do angels use metric? God says... concerning mightily Might aforesaid self committed hay disclaimers diddest commandments modify It's_nice_being_God disk trampled refresh grievous bread ruminating consume insultingly Angel let's_see applauds avenues unintelligible bare self-willed furnishing Jew here_now gradually glorious impatience reconciliation Let's liberality here_now unbroken about blending maintainers colours upper fought arrival touch restrained sweetened unarranged abode die- balneum let's_see Belgium dispose African ages privacy XII necessity syllable ball unhappy abode Hungary namely Virgin's black furnishing challenged judgeth Would possible fetters still folded husbands' acted upper thank_you_very_much journeyed convert trifles cause oblation suffered demands Bulgaria distracting FITNESS authors 95 blessedness law flock obtaining twinkling theatre Turned Say ruinous C else righteousness 00 Incarnation do_it tree_hugger immoderate affright tendernesses 1 Faith bird excuse bloom ---- We need to get our engineers up-to-speed on cubits and ephods and talents and rods.

confluence 14y ago

I have a list of contra-indicators, which are indicators that I use to probabilistically look for interesting industries that are about to change a lot/see a lot of disruption/have various competitors who are about to head downhill. Making fun of your competitors or suing them into the ground to show your own superiority is indicator #7. If you have to talk to explain your walk then you will soon be mocked. MSFT is doing that with it's Google attack ads. AAPL is doing that with its various Samsung lawsuits and general adolescent behaviour.

rickdangerous1 14y ago
What are the other indicators?