A newly published market analysis of Amazon’s Project Kuiper effort to create a global satellite broadband network estimates the cost of getting the project off the ground at $16.5 billion to $20 billion — which is significantly higher than the $10 billion figure cited by the company four years ago.
In its analysis, Florida-based Quilty Space projects that launch costs alone will amount to $10 billion or more. Most of those launches are to be done by United Launch Alliance’s Vulcan Centaur rocket, which has executed only one space launch to date; and by Blue Origin’s New Glenn rocket, which is still in development. Other launches will be taken on by ULA’s Atlas V and SpaceX’s Falcon 9 (which are tried and true), plus Arianespace’s Ariane 6 (which had its debut liftoff in July).
Project Kuiper aims to put 3,232 satellites into low Earth orbit to support a high-speed internet network that could serve tens of millions of users around the world — and, not incidentally, provide infrastructure for Amazon Web Services and for other current or future offerings from Amazon. Under the terms of Amazon’s license from the Federal Communications Commission, half of those satellites must be launched by mid-2026.
Two prototype Kuiper satellites were successfully launched on an Atlas V last year, and Amazon says another Atlas V is to send the first operational satellites into orbit by the end of this year. The current schedule calls for broadband services to be offered to customers starting sometime next year.
Amazon is well behind SpaceX and its Starlink satellite broadband network, which has more than 6,000 satellites in orbit. Quilty’s financial analysis says Starlink “will exit 2024 with 3.9M subscribers, revenues of $6.6B, and positive free cash flows.” But Quilty suggests that there’s still room in the market for Project Kuiper.
“If Amazon can reach 100 million [subscriptions] at an average monthly ARPU [average revenue per user] of $30, Kuiper would generate $36B in annual revenues, rivaling Amazon’s current subscription revenues,” the report says.
Success isn’t guaranteed, however. Quilty’s report says one of the biggest uncertainties has to do with Amazon’s ability to deliver on its launch schedule. “Amazon’s alarmingly high reliance on all-new launch vehicles poses the biggest impediment to getting Kuiper off the ground,” according to the report.
In order to meet the FCC’s mid-2026 deadline, Amazon’s partners would have to speed their early launch rates “to a level not seen before in the history of private space launch,” Quilty said.
“The reality is, barring a miracle, Amazon will need a waiver from the FCC, but we don’t see this as a major roadblock,” Quilty said.
The report also cites what it calls Amazon’s “shaky” track record on consumer devices. “If Kuiper’s expenses spiral and milestones are missed, it risks becoming another costly misstep, similar to unprofitable Amazon ventures like Alexa and the Halo fitness trackers,” it said.
Other highlights from the report:
- Amazon hasn’t said much about the specifications for its satellites, which are being built at facilities in Kirkland and Redmond, Wash. But Quilty estimates that each satellite has a mass of 600 kilograms (1,320 pounds), a solar array wingspan of 8 meters (26 feet) and a manufacturing cost of $1.5 million to $2 million. More than 2,000 Amazon employees are working on Project Kuiper.
- Quilty says the early adopters of Project Kuiper’s offerings are expected to be in the government sector — especially defense and intelligence — and the mobility sector. Amazon has already forged partnerships with wireless telecom providers including Verizon, Vodafone and NTT.
- According to Quilty, “Kuiper’s not-so-secret strength stems from Amazon’s Devices business, with ample experience in mass-producing consumer electronics, and AWS, which powers about a third of the internet’s infrastructure, including cloud computing, data storage and web hosting. … Amazon can quickly tap into markets that Starlink largely had to build from the ground up.”
- The report took note of hints that Kuiper could eventually be used as an alternative to GPS for positioning, navigation and timing services — also known as PNT. “Amazon’s early consideration of PNT for Kuiper increases the likelihood of its success, either as an upgrade to Kuiper Gen-1 or as a part of the larger Kuiper Gen-2,” Quilty said.
In response to GeekWire’s inquiry about the cost of deploying the first-generation Project Kuiper network, an Amazon spokesperson said the company does not comment on speculation. That rule might well apply to other sections of Quilty’s analysis as well.
Check out Quilty Space’s website for more information about receiving its reports.
https://ift.tt/8rJWeQ2 September 12, 2024 at 02:29AM GeekWire
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