We spoke about the last mile problem: how to use an NLV to deliver “just in time” supplies to orbital stations. We spoke of a variable pricing model that would charge NLV customers commensurate to what they could pay (and increase launch demand in the process).
In all of the excitement over SpaceX’s Tremendous achievement yesterday, it was easy to miss Altius Space Machine’s announcement about their recent contract to develop NanoSat Launch Vehicle tanks. Quoting from ASM’s announcement,
“I’ll be using this tank to validate some of the low-cost, lightweight manufacturing techniques that could be used for other low-pressure tanks, like pump-fed propellant tanks for suborbital vehicles or nanosat launchers. Once the development of this system is completed, it should provide a low-cost, highly capable propulsion system for high-end nanosats and microsats.”SpaceX is vertically integrated and associates much their success to this approach – developing all aspects of their product in-house (or limiting external component suppliers).
As NASA’s NLV Challenge heats up, NLV Challenge teams are going to be faced with the same decision: do they develop all components of their NanoSat Launch Vehicle in-house or utilize suppliers like Altius Space Machines, Team Phoenicia, and others to create a vehicle capable of winning the prize.
Over the coming months I expect to see NLV Challenge teams fall into two groups:
- Vertically Integrated Teams: Some will follow the SpaceX model – building every component internally, controlling the supply chain. Advantages of this approach are ease of integration and schedule control. Disadvantages of this approach: Cost growth with low production volumes (perhaps cost savings with high volumes, but this would case specific), and the opportunity cost of developing components that could be purchased by others. Opportunity Cost is what you could have done with your time or money if you weren’t vertically integrated (and in such a competition, “first to market” may win it all).
- Horizontally Integrated Teams: Others will see an advantage of utilizing hardware developed by others. Since I expect the NLV Challenge winner will utilize several vehicle stages (Paul Breed is considering a three stage nanosat launcher), this group of competitors will outsource some stages (or components of stages) and build other stages in-house. With Horizontal Integration, the Advantages and Disadvantages are reversed. Advantages: Using components built by suppliers may get you to market faster/cheaper, and may help you raise angel funding if you can leverage pre-existing supplier hardware when pitching to investors. Disadvantages: Integration and Schedule risk (which could be a HUGE risk for any NLV Challenge competitor)!
Disclaimer: I have become friends with Jon Goff from his blog, Selenian Boondocks. I have re-read this post and think the content is free of too much bias, but you be the judge. Regardless, it should be a good Space Show interview. Check out the Space Show's archives after Dec 13 if you can't listen live.