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Perkins: Data, Not Rockets, Is How “You Make Money From Space.”
BBC News (UK) (9/12) reports that Oxford University Innovation head Matt Perkins said that rockets “aren’t the way you make money from space,” arguing that profits are made “in the downstream end – by using all this information coming from space. As this becomes cheaper that’s going to open up commercial opportunities – with data being used in ways that people haven’t yet thought of.” The vast volume of data “means that AI systems being used to automatically analyse it are having to catch up,” and the industry also will have to resolve issues around public versus private access to data collected, as well as the question of orbital debris, which will pose a risk to the ever-increasing numbers of smaller, low-cost satellites. Planet Labs’ Will Marshall said, “We as technologists have to be the best stewards we can of that data,” and the challenge of space debris is “not going to be an easy” one.
Well, we hear this type of comment every couple of years, and the many launcher operators will shake their head in disbelief. The comment is out of touch with reality. All the professionals in the launcher industry make their money from launching rockets. They profit. Furthermore, the launcher industry as a whole is profitable and growing.
The same argument can be used in the postal services, or even the train industry. The real profit is in the passengers and the intellectual profit produced in the heads of the passengers being transported (intelligent data) on the train or at the destinations, not the train itself. We have lots of train building companies. If they are lead well and innovate, they make a profit.
And yet it is true. Downstream, there is always a bigger profit because rockets, trains and infrastructure projects act as leverage. Downstream they create entire markets that cannot exist without them. Ticket sales, transportation of goods and data, they only come into existence because of this first lever. It is not difficult to understand that rocket companies could charge a whole lot more than they do because of the down stream profits to other businesses and society they do generate.
The comment is specifically out of touch when it is coming from the head of innovation of a University. The reason is simple: If you argue that the profit is only in the data, not the launchers you neglect four basic facts.
- One, it is not true, there is a large profit in the launchers if you do it well, and,
- two you have to get into space in the first place, so without a launcher program and profits to be made, you cannot have a space data driven company. It is not the first time that space data companies go bankrupt because they have to wait to long to get their satellite into orbit.
- Third, launcher companies usually have a group structure always ready to turn an opportunity into a profit. They too see the importance data services have gained in the last decades. Launcher companies usually have their own data driven services, so anyone banking of buying and selling data, might get squeezed out of the market by the launcher providers themselves changing their role into a more general ‘space services company’.
- Four, it is highly doubtful that there will not be a lot of companies who will venture in this market, spend huge sums of money and fail, as this has been the case for decades. The fact that it is less visible than a failing rocket launch provider, does not mean that equally large sums of private money isn’t being wasted in failing companies. It is easy to have the idea that data is valuable, but it is as difficult as ever to turn it into a successful venture for a lot of companies. Being innovative is not enough.
Therefore, it is no surprise that we see another news article on the same day in Aviation International News (9/11) reporting that Airbus has launched a new division, Airbus Aerial, “designed to fuse satellite and drone data into custom-tailored, client-specific packages with easy-to-use interpretation tools.” Airbus Aerial President Jesse Kallman said that his company has been “bringing in commercial drones and fusing it with that satellite data” in a cloud-based solution for “businesses that haven’t traditionally used this technology.” Kallman said that the company’s “core business is software,” and that its customers are drawn from utilities, insurance companies, state and local governments, and agricultural companies.
The situation of Arianespace and Airbus is that they are operating a commercial launcher, the Ariane 5, that is no longer competitive. So, next to jumping more pronounced into a trend that has existed for several decades, that of sensor fusion and data marketing, there is nothing new that the industry hasn’t already recognized a long time ago. Being competitive on the launcher market or recognizing that data is important are not two mutually exclusive things within the same company.
If Arianespace and Airbus want to be competitive and make a profit, they have to build and operate a commercially viable launcher. If SpaceX can demonstrate this is possible across the ocean by using better technology, Airbus and Arianespace as a company, or European enterprise in general, could do the same.
The truth is that the supply bottleneck in launcher capability still exists. The success of SpaceX creates an even bigger problem. More satellite builders are buying more services of SpaceX, which cannot yet fly the extra missions. From the satellite builders’ side, the price argument has become definitive because, contrary to past decades, you can fly two to four satellites for the same price (price of a SpaceX mission compared to a Delta Heavy). Or, you can have three SpaceX launches for one Ariane 5.
The Oxford University Innovation Head might be better of saying that SpaceX is making a profit from rockets because they innovate, not because there is no money in launchers.
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