SpaceWorks Commercialtoday released their latest nano/microsatellite market study.You can download it here.The study is quite bullish on the growth of Nanosatellites over the next decade with over 20% growth per year through 2014.
If you are a regular reader of this blog, you know I am a big advocate for Nanosats and Nanosat launchers .But I do want to caution us that the authors of this analysis are also developing theGeneration Orbit Nanosat launch vehicle. Some may doubt how unbiased their nanosat market study can be when they are developing a vehcile to launch them.However, the counter argument could also be, it was reviewing this same market data several months ago (now made public) that led som of the folks over at SpaceWorks to start Generation Orbit in the first place.
Here are a few highlights from the report.Note many of these comments are direct quotes from the SpaceWorks study itself:
180 known future nano/microsatellites to launch by 2014
Range of 100-142 nano/microsatellites (1-50kg) that will need launches globally in the year 2020 (verses 23 in 2011)
32 are estimated to be 11-50kg satellites
68 are estimated to be 1-10kg satellites
75% expected to be foreign or academic payloads
Military growth accounts for the majority of the delta between the 100 launch estimate and the 142 launch estimate for 2020
New Program list of Known NanoSats:
QB50 – 50 Cubesats to be launched between 2013 and 2014
NRO Colony I – 12 Cubesats to be launched over next few years
NRO Colony II – 20-50 Cubesats to be launched following Colony I
ALASA– 36 mirosatellites to be launched beginning in 2015
The number satellites launched may not equal the number of launches since many satellites are multiple-manifested
4.38% growth in Nano/microsatellite launch demand since 2000
22.5% growth (!) in Nano/microsatellite launch demand expected from 2011-2014
Market saturation point was set at 150 launches per year (the projected 2030 value) (however SpaceWorks admits that some estimates project CubeSat launches at over 600 per year – well above their 150 launch ceiling)
For a fee, Customers can license SpaceWorks more detailed database of nano/microsatellites
Additionally, the SpaceWorks estimates in this market study are based on growth in popularity of Nanosatellites and Microsatellites on existing launch vehicles (with the possible exception of the launches connected with ALASA).As soon as you CAN launch every week or day on board a new generation of quick response Nanosat launchers, many new uses will be found for this class of satellite.And many new customers, yet to be identified, will be taking advantage of such frequent access to space.
Abu Dhabi’s Aabar made asecond investmentin Virgin Galactic in July, increasing its stake in the company to roughly one-third ownership.This marks the second investment by the Abu Dhabi based fund in the last three years.
Bottom line:
2009 investment for $280M equaled a 31.8% stake.Post Money valuation of $900M.
2011 investment for $110M increased its ownership stake to 37.8%.
Based on this data I estimate one of two scenarios:
Scenario #1: The 2009 investment was a down round with prices per share less than what Virgin had previously valued the company, and the 2011 was an up round.An example of this scenario is provided below.Note the percentage change between share price is valid but the share price itself is not publicly known, so I am using a simplified $1 per share for example purposes.
Scenario #2: The share price has not changed since the company's founding.In addition to the two Aabar investments Virgin has brought in $21.5M from other outside investors.An example of this math is below.
Both of these scenarios match the data provided by Aabar for the last three years.
Reasons for Virgin taking additional investment range from:
1.Preparations for new growth (Nanosat Launch vehicles or other new products)
2.Paying for the delays in reaching commercial operations for its suborbital product
3.Building up a war chest for a rainy day (when money is available sometimes you just take it)
In my last post I explored how the SpaceX's reusable Falcon 9 (rF9) could threaten those companies offering suborbital launch services.
Discussion has focused on the risks preventing the rF9 from reaching the optimistic breakeven price point of $130 per kg (discussed in my last post).Here are a few of the risk categories you have raised:
Increased variable costs: Elon may claim only $200K of propellant per flight, but the variable costs of an rF9 flight will surely be higher
Reduced number of flights: When you factor in the complexities of reusing a launch vehicle and the potential for a crash or loss of vehicle
Reduced payload capacity: Adding reusability will increase the mass of non-payload components – reducing the payload mass
What rF9 breakeven price points might we expect if we take these concerns into account?In the table below, I explore these risks and their impact on breakeven price per flight and breakeven price per kg.
In the second column are the breakeven prices today for an expendable Falcon 9.This is the upper end of cost.Weight any of these risks to the point you get price points beyond $5K per KG and customers will prefer the current Falcon 9 over the reusable version.The third column shows the optimistic assumptions from my last post.Columns four through six:
Increase variable cost per mission from $200K to $2M
Reduce reusability from 47 missions per vehicle down to only 10 missions per launch vehicle
Reduce payload capacity by 50% from 10,450KG to 5,225KG
These risk values give us a range we can talk about.Even variable costs of $2M per flight, only 10 flights per vehicle, and half of the payload mass consumed with reusability hardware, SpaceX should be able to reach breakeven price points of about $1500 per KG and $7.5M per flight.
And the great thing about risks…they get retired.Be as pessimistic as you want to be about the capabilities of the initial versions of the rF9.Variable costs will drop over time.Flight rates per vehicle will rise, and payload mass will creep back up.The key has been (and will always be) flight rates.I wouldn't be surprised to see SpaceX subsidize their first generation rF9, offering first generation customers prices SpaceX won’t be able to satisfy profitability until the second generation rF9 – all in the name of increased flight rates.
How optimistic or pessimistic are you about rF9 capabilities?Here is an interactive spreadsheet for you to explore your own risks and their effects on breakeven prices.
With SpaceX’s announcementthis week that the company would not only develop a reusable first stage for its Falcon 9 family of rockets but would make a completely reusable rocket system (I will use Clark Lindsey’s nomenclature: "rF9" for reusable Falcon 9), I have been wondering about the future of the young NewSpace companies developing reusable suborbital rockets.Will companies like Masten, Armadillo and to a lesser extent XCOR and Virgin Galactic, survive this incursion from a well-funded NewSpace Cousin?
(the youtube video via Clark Lindsey's youtube channel.)
SpaceX has announced the company is developing the “Grasshopper,” a 100 foot-tall suborbital Falcon 9 first stage that SpaceX’s cadre of young, talented engineers will use to test this initial piece of the rF9.SpaceX has NOT announced any intention to commercialize the Grasshopper.But if Masten, XCOR, and Armadillo continue to delay bringing a product to market that can reach 100KM, and SpaceX continues to develop products in its typical rapid fashion, might customers ask to buy payload space on an upcoming Grasshopper test?
Or would SpaceX be willing to sell Grasshoppers to operators who then provide a suborbital launch service to users using the Grasshopper all before Masten has reached 100KM?Could the unmanned Grasshopper be modified to carry passengers and compete with Virgin and XCOR?If an operator came with funding, wouldn’t SpaceX take their money to make the modifications to "manrate" Grasshopper?
But the big money is the orbital market.Most of the suborbital companies have expressed interest in using their suborbital experience and even their suborbital vehicles to expand current offerings to include an orbital system.XCOR has published this image of an orbital capability.
Virgin Galactic even took investment moneyfrom the Middle East to jump start their orbital program.Could an rF9 meet all market demand for both suborbital and ultimately orbital launches as well?And if they do, are the current suborbital companies doomed?
It all comes down to money.
How cheaply could SpaceX really launch their new rF9?We don’t know.SpaceX does not even know yet.But we can make some interesting estimates.The heart of these projected orbital price reductions stems from reusing the rF9 like Southwest reuses its 747’s (which can fly commercially for 30 yearswith proper maintenance). How many reuses is SpaceX planning on?
At this point, the best data I have is a nugget SpaceX's CEO, Elon Musk, said this last week that he is targeting $500K trips to Mars as a market for his reusable craft.
Let’s make some assumptions so we can approximate SpaceX’s reusability assumptions:
A price for a Dragon/Falcon 9 trip to Mars will be equal to the price SpaceX is currently charging NASA for ISS visits ($130M per trip) - optimistic assumption
5 paying passengers per Mars Trip - optimistic assumption
10% profit per launch
All maintenance and between-flight costs are included in the launch price - optimistic assumption
SpaceX breaks even after 47 flights (but that is a lot of assumptions). here is a table to help visualize the math:
Assuming a 47-flight amortization, what could be SpaceX’s breakeven price per KG to LEO?Or to say it another way, how low would the suborbital company’s prices have to be to beat SpaceX?
Again, let’s make some assumptions:
A price for an rF9 to LEO is the same as current LEO Falcon 9
Falcon 9 payload to LEO is unchanged
10% profit per launch
All maintenance and between flight costs are included in the launch price.
Propellant Cost per Launch = $200K
rF9 breaks even after 47 flights
Based on these assumptions, SpaceX's breakeven Price to LEO for rF9 is $130 per KG or ~$1.4M per flight. Again, here is a table to summarize how I came to this conclusion. At the end of this post is a link to an interactive spreadsheet where you can modify these assumptions to create your own analysis.
These SpaceX prices are surely the most optimistic for the near term:
What if the rF9 doesn’t get 47 flights per vehicle?
What if between-flight maintenance costs for the rF9 are significant?
What if payload capacity has to be significantly reduced to accommodate rF9’s reusability elements?
What if near term launch demand is not high enough to fly as often as they need?
Even with the identified risks, this analysis would indicate:
Yes, rF9 could compete against suborbital companies for suborbital market share (especially if SpaceX sells the Grasshoppers to entrepreneur operators)
Yes, rF9 could compete against suborbital companies for orbital market share through extraordinarily low prices
So how can XCOR and Masten compete?
I continue to be bullish regarding the utility of Nanosat-class launch vehicles. When suborbital companies start offering orbital services (a second generation service), their initial orbital offerings would probably be within this Nanosat class - broadly speaking, payload space significantly under 100kg.Is there still a market for suborbital companies to offer this type of orbital service? Even if SpaceX may be able to now match (or beat) them on price?
Yes.Here is why:
Sometimes smaller is better.The smaller vehicles these suborbital companies will eventually offer on orbit should:
Be easier to "fly full"– to get the $130/KG price on an rF9, you have to wait for the manifest to fill.Not so with a smaller vehicle. XCOR was talking about a payload of 12-20KG initially.
Be easier (and cost less) to maintain.
Be launched with less integration or preparation – this advantage is the BIG one. XCOR talks about multiple flights on the same day, taking off and landing from existing airports.Even if the rF9 could launch that often, it will be some time before regulations allow SpaceX to fly that often - especially if they are still flying from the Cape or Vandenberg where ops tempo is measured in "launches per month" not "launches per day".
Nanosat launchers are the future, but only if their ops tempo is fast enough to justify paying a premium for preferential launch windows.
This advantage of the small won’t last forever.SpaceX will keep improving its initial RLV offerings. Spaceport operations will grow to allow for more airline-like ops tempos. So Nanosat launch operators (today’s suborbital companies) will have to keep improving too.
But there is a market for Nanosats and it hinges now on ops tempo. There is hope.
The bigger worry…
…is in the near term.I mentioned earlier, I doubt SpaceX will pursue commercializing their Grasshopper suborbital vehicle.But they may be open to selling this suborbital vehicle for others to operate.Such a suborbital operator flying the Grasshopper would have tremendous suborbital market advantages and could be a major competitor to those suborbital companies focusing on suborbital research (Masten, Armadillo, etc.).
Suborbital companies should be worried, but not panicking.If the reusable Falcon 9 hastens the development of viable Nanosat launchers, the industry will be doubly blessed – low launch costs from the rF9 and high ops tempo from Nanosat launchers.
In my last post, I talked about the business lessons applied in developing the Altius Space Machines Business Plan.
Jon Goff, Altius’s CEO, thanked quite a few people in his post here. On the business side, recommendations and advice came from a host of valuable people including:
One person that fills the dual-role of Advisor and Investor for ASM is Richard David of NewSpace Global. Richard David has been a great asset to Altius providing that critical opinion,
“How does this look from the eyes of an investor?”
If you don’t have such a person for your venture – get one! You need an “Outside Insider” on your team. Someone that believes in you/your Company and understands your business plan/market/technology but still can bring fresh eyes to how you explain these themes to the uninitiated.
Richard is also bullish on the new space industry and will be rolling out New Space Global in the coming weeks at which time I will post a more formal interview with Richard and let him explain his new venture first hand.
But for now, let me thank all of those people that contributed business ideas and recommendations that got swirled together into the Altius Space Machines business plan win.
Jon had been pitching his new technology – “Sticky Boom” which is a really long tube with glue pads on the end of it. Only the tube can be rolled in or out and the glue can be turned on or off via an electric current. Altius knew Sticky Boom had space rendezvous and docking applications (think servicing satellite, grabbing lost wrenches during EVAs, etc.), but could we wrap a business around this cool technology?
Assisting on the Altius Business plan has been a big part of my life over the last few months which is my excuse for light blogging.
I am pleased with the result (yes, we won the $25K grand prize). Here is Jon Goff, Altius's CEO, pitching the plan(worth watching to get a better feel for what ASM is really trying to do as a company - about 6 minutes long).
Here are a few highlights the team at Altius and I kept discussing while developing this plan:
Is there a problem people will pay you to solve? If not, you do not have a market.
An attractive Market is even more valuable than an attractive technology. New space technology is cool to us space nerds, but markets determine how valuable company technology really is.
Your customer is the organization that pays you – not necessarily the group that uses your product.
Once you have found a market, be cautious before competing head to head with incumbents (those competitors already selling to your market) – how do you take market share away at the edges without drawing an incumbent response –a disruptive strategy.
Management team – do you have the right team? This is so important. If you get the market and management right (and maybe a little traction), investors know that even if the product or technology changes over time, the company will have a good chance at success. There is no substitute for the right market and the right team.
Money: how much do you need and how are you going to get it? Banks probably won’t lend to you (at least not at first). Investor money is an obvious choice but have you thought about govt contracting or strategic partnerships?
Few investors understand NewSpace (if you find one that does, keep him/her happy!). The industry is small and in its infancy. It is not right to expect Tech and Biotech investors to immediately understand: ISS regulations, LEO vs GEO, terminator tethers, plane changes, lagrange points, etc. The question becomes how to present your idea in terms/images VC’s will understand while still being concise? I recommend pitching your deck to your spouse or your mom. If your Mom doesn’t understand your plan, VC’s won’t take the time to understand it either. Simplify. Simplify. Simplify.
The “prize” in most public competitions is the publicity and connections made as a result of winning, not in a the few dollars at stake. This is what the Google X-Prizeteams are fighting over – the media rights! To highlight the value of publicity, here are a few of the Altius Space Machines articles that have been written since winning the prize. Ask yourself how long it would have taken to generate this media attention without the win?
Plus the sites that published the press release or the many posts by NewSpace blogs (thanks guys).
Business plans are like going to College – professors push you to do what you probably could not discipline yourself to do on your own. This is why we have all-nighters finishing 20-page papers and cramming for tests. On your own, you would just go to bed.
Business plans are great forcing functions and entrepreneurs learn a lot through the process. I am glad I got to be apart this journey.
Here was some great advise we tried to follow when preparing the slide deck for the competition:
Dr. Steven Tsitas received his BSc(Hons) in Physics from the University of Melbourne, MS in Physics (with Distinction) from California State University Fresno and MS and PhD in Planetary Science with a minor in Astronomy from the California Institute of Technology. His two part PhD thesis title is The effect of volcanic aerosols on ultraviolet radiation in Antarctica and A novel method for enhancing subsurface radar imaging using radar interferometry. After completing his PhD Steven worked as a Management Consultant at Bain & Co. in San Francisco. He recently completed a MSc in Astronautics and Space Engineering at Cranfield University, receiving the Vega Space Systems Engineering Prize for Excellent Performance in Dynamics Related Subjects 2008/2009. His most recent papers detail the system design and commercial applications for an 8 kg, 6U CubeSat that can perform Earth observation missions equivalent to those of current 50-150kg microsatellites, with a corresponding reduction in cost.
And now my conversation with Dr. Tsitas:
Q: Your paper posits the potential of a constellation of cubesat earth imaging satellites capable of performing their job on par with current industry leaders like the European company Rapideye. To fit so much capability into a 6U Cubesat is incredibility daunting. What innovations are you proposing to accomplish this?
Steven Tsitas: I employ several innovations to make such a solution possible:
Time Delay Integration (TDI) to allow a small imager to collect as much light as a larger aperture;
Determining attitude during imaging by rate integration using a Fiber Optic Gyroscope to meet the requirements for pointing stability following from the use of TDI; and
DVB-S2 encoding and a three speed transmitter to allow fast downlink from such a small spacecraft.
One of the things that I like about space engineering is you can twist and turn around obstacles to find solutions - it is quite a creative process. However the design process isn't arbitrary, the culture of space engineering is to design to requirements, and if done well every component in the spacecraft can be traced to a top level requirement through a process of step by step logical decisions. Just as a limited palette doesn't limit an artist, this logical discipline doesn't have to limit creativity in the design of spacecraft.
Q. RapidEye produces images in five spectral bands including infrared – does your proposed 6U system do the same?
Steven Tsitas: Yes, it images in the same 5 spectral bands as RapidEye.
Q. RapidEye produces a 6.5-meter resolution image – what resolution image does your proposed 6U system produce?
Steven Tsitas: 6.5 m Ground Sample Distance (GSD), the same as RapidEye.
Q. RapidEye admits their 6.5-meter resolution is not adequate for some commodity customers like those tracking crops like grapes, strawberries, and peanuts. What is the highest resolution (better than 5-meter?) that you believe possible today in a 6U?
Steven Tsitas: Good images aren't just about resolution, but also having good contrast at medium spatial frequencies. This is quantified by the Modulation Transfer Function. I've seen a high resolution image with poor contrast at medium spatial frequencies, and it looked much worse than an image of the same scene with lower resolution but higher MTF at mid spatial frequencies. I could improve the GSD of the 6U CubeSat design at the expense of contrast, but this wouldn't necessarily give better or more useful images. Fundamentally resolution is limited by aperture size, and the 6U CubeSat design has an 89 mm aperture imager. Given the 6U CubeSat is just 100 mm thick this is obviously close to the limit. Short of some kind of foldable optics or deployable membrane mirror technology I don't think you are going to do much better than that with 6U.
Q. RapidEye’s satellites are designed to last seven years – your research indicates a 12 year satellite life per 6U. How would the orbital life of each satellite change by offering the RapidEye service of a photo anywhere on earth within 24 hours?
Steven Tsitas: To be clear, the paper indicates that the orbital lifetime could be 12 years, and in fact could exceed 25 years requiring a deorbit device, for which provision is made in the design. The orbital lifetime is not necessarily the same as the operational lifetime. Regarding the effect of imaging operations on operational lifetime, the 6U CubeSat design does not include propulsion or any consumables, so there is no direct link between a particular imaging campaign and the operational lifetime of the spacecraft.
Q. In a recent post, I speculate on the economics of a such a 6U cubesat constellation. What further are you planning in this area?
Steven Tsitas: I discuss the commercial implications of the 6U CubeSat design in an upcoming paper. Standby. Perhaps we can continue this conversation after the release of the new paper.
Thank you Steven. Yes, let’s talk again with the release of your paper on the economics of such a cubesat system.
Back in 2010, Michael Mealing began to consider a spacecraft mission to capture and return a very small Near Earth Object (NEO) to the ISS or Bigelow module for study. He writes about business concept here. Michael’s point, humanity will only travel into the solar system if they can make money at each step. NEOs may be the next step after LEO.
Then in January, 2011, the topic of a NEO capture and return to LEO comes up again in the comment discussions on the Space Business Blog here. So Michael and I have teamed up to continue refining this business concept.
Here’s a Pencast describing the basic concept for a mission to return a small asteroid sample to a space station in LEO. I also include a few markets that might make such a mission profitable.
Moon dust legally for sale - $50K for a few small specs.
Next, I will walk you through the spreadsheet model built to analyze what would be required for a mission like the one described in the Pencast above.
Assumptions:
Spacecraft launched to LEO Space station to standby until target asteroid has been identified.
Spacecraft launched from LEO space station and returning to LEO space station.
Haul all propellant for round trip (no refueling).
A duplicate amount of Delta-V will be required for both the trip out to the asteroid and the trip from the asteroid back to a LEO space station (assuming NO aerobraking to avoid damaging asteroid). Note: The mission’s costs could be greatly reduced if one could determine a smart engineering method to reduce the needed delta-v for the return trip to a LEO space station.
Mass of dry spacecraft: 200Kg (Similar to NEAP but swap out all of NEAP's science gear for some type of grappling mechanism).
Engine efficiency Isp = 342 seconds.
Although spacecraft is docked to LEO space station before mission start, this model assumes no propellant boil-off or LOX top-off prior to mission start.
Since the target NEO is still undetermined, multiple Delta-V’s were modeled to reach NEO targets. Delta-V’s between 5500, 4500, 3500, and 2500 m/s were considered.
Asteroid 2010 RF12 has a radius of 3.5m and a mass of 500,000kg according to NASA. Prorating these values to a radius of 0.5m gives you a sphere slightly smaller than the desired “refrigerator” in Michael Mealing’s earlier posts with a mass of 71,429Kg. This mass is larger than what I wanted to consider for a proof of concept mission, so although I include the 71K Kg mass in the analysis, I focus on target asteroid masses of 500, 300, 100, 50, 25, and 10Kg.
Conclusions:
The table below is the summary of my analysis. The columns in the table below represent the multiple delta-v’s modeled for our 200Kg spacecraft to travel from a LEO space station and AR&D with the target NEO. The rows are the various NEO masses that were considered (or – how big of a rock the mission can go out and get). The data populated (the cells with numbers) are the total mission masses for each combination of delta-v and NEO mass. The total mission mass includes all propellant needed not only to reach the NEO but to return it to LEO as well. The color coding correlates to the launch vehicle table below – Dnepr in green, Falcon 9 in orange, and Falcon Heavy in purple.
A few Observations:
Finding low delta-v targets will dramatically increase the size of the asteroid one could successfully return. For example, instead of a 10Kg target at 5,000m/s of delta-v, the same spacecraft could return a 500Kg target if only 2500m/s of delta-v were needed to reach it (and at almost half the total mission mass!) – that is a lot more rock for scientists to analyze – 500kg instead of 10kg.
Are there ways to decrease the delta-v required to reach these targets or return from them (currently avoiding aerobraking, but maybe a small asteroid could be shielded during aerobraking)?
Because such small NEO objects will be difficult to spot a head of time (there are many more NEOs than we have on record - especially small ones), such a mission has to be very patient waiting on station many months/years for the “perfect” NEO to approach with the right blend of low delta-v and a mass that is “just right”. And to respond to new targets, the mission must be ready to depart the station on very short notice in pursuit of any newly identified targets.
Growing humanity’s knowledge of very small NEOs increases the chances of mission success.
Here is an example of the tables I built to analyze propellant needs. Here are the tables feeding the 5500 m/s of delta-v column. The colored cell in each table varies the asteroid masses. Here is the interactive spreadsheet for those that want to modify my assumptions and want to view the tables for the delta-V's modeled as well.
Delta-V 5500m/s:
Next steps:
Michael and I plan to refine this concept over the coming months. Look for follow-up posts here on SBB and over on Michael’s blog.
The use of Commercial Earth Imaging Satellites is growing. Individuals, corporations and governments are finding varied and unique applications for images of our planet.
Futron estimates the market for commercial earth imaging topped $1B last year (2010).
Uses of Earth Imaging:
Disaster Relief – think of all of the satellite images you saw after the Japan Earthquake (including the nuclear reactors)
Helped with hunting down Osama bin Laden (but were any these images from commercial satellites?)
Food Commodities tracking – allowing traders to ask and answer questions like, “how do the wheat crops in Kansas look after last night’s hail storm?”
Remote Infrastructure observation – the oil industry uses it to keep track of their assets in remote locations
Even the US Government is turning to Commercial providers. Last year, the U.S. National Geospatial-Intelligence Agency (NGA) awarded separate 10-year, $3.5 Billion contracts to image providers DigitalGlobe and GeoEye (these contracts are now under review).
The Commercial earth observation markets:
Market #1: High-Resolution images (1.5 meters per pixel). But the cost of each satellite means providers have a limited number of satellites (usually 1-2) on orbit.
Market #2: Med-Resolution images (5-7 meters per pixel) – lower quality images, but providers tend to have more satellites in orbit and may offer more spectral bands to choose from for each image and offer more frequent photo opportunities due to the higher number of satellites within the constellation.
In a recent Nov 2010 paper, “6U CubeSat design for Earth observation with 6.5m GSD, five spectral bands and 14Mbps downlink,” author, Dr. Steven Tsitas outlines how a constellation of 6U CubeSats could serve Market #2 (frequent med-res images) competitively. (Sorry, I think you will have to buy the paper. If a reader finds a free version of the paper online, let me know and I will change the link). I hope to post an interview with Steven Tsitas soon.
But why even consider a CubeSat at all for such a mission? Here are just a few of the advantageous of using CubeSats:
High amount of innovation in the field – from NASA, universities, and private industry
Low ITAR restrictions (CubeSat programs are thriving in many nations)
Low mass of each satellite
Reduced launch cost per satellite
Reduced cost to replace/upgrade constellation as satellites age, breakdown, or new technology becomes available
Rapid Eye, a German company, is the current leader serving Market #2. Below I will provide some details about Rapid Eye and how a CubeSat constellation might be able to compete with Rapid Eye. First, a little education about Rapid Eye.
Rapid Eye Details:
Five identical sun-synchronous Earth observation satellites
Five spectral bands
Launched in August 2008
Satellites built by Surrey UK
650KM circular orbit
Captures 4mil km squared of earth’s surface every day
Once an order is placed for an image, can take a photo of any location on earth (between 75 degrees N and 75 degrees S) within 24 hours.
Offers not only images, but offers services for the analysis of images – especially good at providing comparative analysis of images taken over a period of time
Rapid Eye, the Numbers:
Customer price for images: $1.33 per square KM (must purchase 5,000 KM at a time (at current Euro conversation rates that is equal to $6650 per very large image)
Assumed the cost of the single Dnepr launch necessary to lift the five Rapid Eye sats: $15M
Assumed a $50M infrastructure Hardware purchase (ground station and other startup infrastructure)
Assumed a five year startup at a cost of ~$25M per year in operating (non-HW, non-infrastructure costs)
So what if we could launch a constellation of ten cubesats that could perform a very similar function as Rapid Eye’s current constellation of five small sats? Are their savings if we could? For this post, I will use Steven Tsitas’s conclusions that, yes, such a cubesat constellation would be technically possible.
I will build my business case, not from a technology discussion, but by attempting to answer the business question of - how much could an business save by using Cubesats instead of small sats?
CubeSat Venture Assumptions:
Cost per 6U CubeSat: $400,000
Number of CubeSats in constellation: 10
6U CubeSat mass: 8 lbs each
Falcon 1 launch: $9.8M
SpaceX willing to prorate launch cost based on mass
If we assume the CubeSat venture would operate using the same Hardware and Operating Costs as the Rapid Eye venture, then the CubeSat savings are limited to the cost of the satellites themselves and the cost to launch them into orbit:
Rapid Eye’s satellite and launch costs: 23% of breakeven costs
CubeSat venture’s satellite and launch costs: 3% of breakeven costs
This would mean a CubeSat venture competing with Rapid Eye could theoretically lower image prices by twenty percentage points over competitors (all other things being equal). This by itself may close the business case for some CubeSat constellation investors.
But perhaps competing toe-to-toe with Rapid Eye is the wrong business model. As a general rule, it is hard to out Wal-Mart, Wal-Mart. What-if the CubeSat earth imaging venture could, instead, become the low-price, no frills, earth imaging provider?
In the earlier example, the CubeSat advantage was limited to lower satellite costs and cheaper rides to orbit on SpaceX launch vehicles. But what-if the venture could also save money on ground costs: Hardware/ground stations and operating expenses?
CubeSats, the low-cost leader in earth imaging Assumptions:
Continue with assumptions regarding low satellite costs
Continue with assumptions regarding low launch costs
Lower ground Hardware and Infrastructure costs from $50M to $25M
Lower operating costs from $25M to $10M per year.
Here is a quick cost comparison between the options:
Next Questions (beyond the scope of this post):
Market price elasticity: How price sensitive is the earth imaging market? How would cutting Rapid Eye’s price by 20-60% affect demand for a CubeSat-based image product?
What realistic cost reduction methods are possible in ground hardware and personnel?
Admittedly, my Rapid Eye information was limited to publicly available data, a more serious effort should be conducted to understand the competitor’s cost structures and current profit forecasts
What are the cost implications from using a CubeSat-based system? Where are system costs reduced? Where are system costs increased?
Admittedly, images from a CubeSat are of a lower quality than the best in orbit (5-7 meters per pixel compared to 1.5 meters per pixel from the industry leaders of market #1). How sensitive is the market to image quality? And what can be done to increase the quality of an image taken on a 6U CubeSat?
The National Space Society posted last week about a new Law School text book that includes a chapter on space property rights written by Alan Wasser and the Space Settlement Institute.
I first interviewed Alan Wasser a year ago and later built a business case on a lunar facility operating under Alan’s proposed land claims legislation.
With the release of the new textbook, I wanted to catch up with Alan so he could give you an update:
Q. For those that don’t know, what is "Land Claims Recognition" and how does it relate to space property rights?
Alan Wasser: There is one very high value, zero volume product that already exists in space, just lying around waiting for us to exploit it: Real Estate.
Land Claims Recognition would allow private Lunar settlements to claim some Lunar real estate and sell portions to people back on Earth, serving as a revenue source to fund private enterprise space settlement. No need to set up a factory in space, No need to mine it. No need to haul it back. Just land, set up a permanent settlement, claim it, and start selling the surrounding land to investors and speculators back on Earth to pay back the cost of developing affordable transport.
The US government has now officially decided not to go back to the moon, philanthropists cannot afford it, and there is nothing else on the moon or Mars that could be profitable enough to justify the cost of private enterprise developing safe, reliable and affordable human transport.
Therefore, Land Claims Recognition is now clearly the only way we are ever going to see a significant return to the moon, but this time to stay.
Q. You provide a legal defense of these land claims. Talk to me about your efforts.
Alan Wasser: Land Claims Recognition would allow individuals or companies to appropriate and sell lunar land, - but ONLY after they have already established a true permanent human settlement on the land they are claiming.
It is the settlement, itself, (and only the settlement) that can make a claim under the Outer Space Treaty. No Earth government can claim the land or give it to them. The only thing governments can do (or not do) is pass laws about how their courts should treat sales of Lunar (or Martian) property to their citizens - "recognizing" the legitimacy of the settlement's claim and therefore, the validity of the sale.
When I started this debate, some argued that I was wrong about the legality of land claims recognition under the Outer Space Treaty, etc. So Doug Jobes and I took the time to establish an airtight legal case for it. In its winter 2008 edition, SMU Law School's "Journal of Air Law and Commerce" published our article describing land claims recognition in detail and establishing the legal basis for it, complete with 182 footnotes. The Journal is the oldest scholarly periodical in the English language devoted to the legal and economic problems of aviation and space, and is the most prestigious law journal in its field.
You can read the article here. For a less legalistic version of how Land Claims Recognition work (and the answers to 25 frequently asked questions) see here.
Q. And now Land Claims Recognition has been included in a new law text book?
Alan Wasser: Yes! The fact that lunar land claims will now be taught in law schools is an even more convincing demonstration that, though there may always be some dissent, the general legal community seems to have accepted Land Claims Recognition as being fully in accord with existing international law.
The textbook is from Westview Press: "International Law", Silverburg, ed., (ISBN 978-0-8133-4471-3). "Space Settlements, Property Rights and International Law: Could a Lunar Settlement Claim the Lunar Real Estate It Needs To Survive?" is Chapter 13, pages 275 to 299.
Q. When we last spoke, you were marshalling an effort to approach Congress with legislation consistent with your articles.What is the status of your legislation?
Alan Wasser: The AIAA Space Colonization Technical Committee (SCTC) recently sent two teams to Congress to lobby for a Land Claims recognition law. They got a good reception but no comittments. It will need much more support from the Space community to actually get introduced and passed, setting off the next space race.
Space Business Blog Footnote and full disclosure: Over the last year I have become more and more convinced by the mission of the Space Settlement Institute, so earlier this month I joined their volunteer staff as a policy analyst.
