Trends Digest

The small satellite market is finally taking off. Cheap satellites the size of beer kegs and coke cans are about to kick off the party in the smallsat market. The day of the private satellite constellation is finally here and ready to challenge traditional value chains. Smallsats weighing-in at less than 500 Kg cost about 1/10th of the price of conventional satellites and can perform technological feats that were once the exclusive domain of governments. Now they’re producing new disruptive business models that will upset the status quo. Like the appliance server market, smallsats come in all shapes and sizes. From the size of a refrigerator to the size of a quarter, they include various classes of microsats (cubesats, nanosats, picosats, and femtosats).
Facebook’s WhatsApp acquisition is a strategic marker in an unfolding new space saga. Most of the world’s chat traffic previously went through terrestrial mobile wireless operators, but chat traffic is quickly being snatched away by companies like Facebook with its $19 billion acquisition of WhatsApp. WhatsApp’s biggest challenge is maintaining a growth rate of about 1 million new users a day.
This kind of growth has been vacuuming up the world’s available connected users, and in order to keep up the momentum, it will take connecting up the underserved in the world’s remote regions. This means that to keep growth going, companies, like Facebook and Google, who rely on growing connectivity, will have to expand to remote areas that are too costly for mobile carriers to serve effectively.
A big windfall from heavy Defense spending has been advancement in UAV’s (Unmanned Aerial Vehicles/Drones) and microsatellites. UAV’s are not just a viable technology, but their cost profile and technological efficiencies offer alternative business cases for air-to-ground communication links to underserved areas.
Now, small satellites are quickly becoming a new alternative for affordable communications and remote sensing applications. Communications and remote sensing have come of age through university research and DOD programs. Smallsats are the new kids on the block, and in the right place at the right time.
Smaller, less-costly satellites are often better suited to more targeted tasks, unlike their larger heavy-duty cousins. Large communications satellites can weigh over 6000 Kg and cost hundreds of millions USD to build and launch to geostationary orbit. Meanwhile, many smallsats operate in low earth orbit (LEO) and have a mass ranging from about 10 grams (about 3 sugar cubes) to around 500 Kg (about the mass of a large refrigerator). Price tags range from thousands of dollars to tens of millions depending on weight, function, and purpose. These small spacecraft can be scaled-up to being capable multi-function satellites, or scaled-down for more limited functionality, such as low data rate communications.
1) Smallsats Can Provide Quick, Affordable Solutions to Growing Market Niches like SMS
Mobile SMS traffic can be offloaded to smallsats. Smallsats can affordably fill gaps in a network-agnostic future 5G world. The future of mobile communications is a meshed network environment having many different networks, including WIFI, WIMAX, satellite links, LTE, and terrestrial fiber.

The focus of future satellites will be on moving data, which makes a microsat look much more like a utility router or internet hot spot. Global technological movement is toward a network-agnostic world, and space is going to be an increasingly BIG part of it.

2) The Small Launch Market Is Getting Affordable and Creative
The biggest problem with the smallsat market has historically been access to space — launch cost and availability. However, with some satellites now the size of footballs, they can be kicked out into orbit from existing structures like the International Space Station.

Space start-ups like Nanoracks and Space Services, Inc. are bringing costs down by offering innovative menus of smaller space services. Space-X recently sent tremors through the launch industry when it announced it was aiming for a $5-7 million launch-cost sweet spot, a harbinger of low cost launches to come.

3) Smallsats May Prove to be More Functional and Affordable than Existing Rapid Solutions like UAV’s
UAV’s have been taking off strongly in the global marketplace, providing everything from quick communications solutions to surveillance and imaging. However, small satellites are already aggressively eating into UAV market share.

Facebook’s fascination with solar powered UAV’s to provide internet to the “unconnected world” is a bellwether for market niche growth and rapid deployment. Smallsats are quickly overlapping and overtaking UAV value propositions. Industry interest and attention is beginning to move from UAV’s to cubesats. MDIF (Media Development Investment Fund), a global fund with a focus on getting internet connectivity to the underserved, is embarking on a cubesat venture that would place hundreds of cubesats in orbit, like flocks of Rubik’s cubes, to provide Wi-Fi access to remote regions.

4) Cloud Computing is Creating New Opportunities for Smallsats
As processing power and data storage are increasingly aggregated in the cloud, satellites can be designed with lighter payloads and less on-board electronics. That means less R&D, cost, and operational complexity, fewer moving parts, and reduced vulnerabilities in the harsh environs of space. This is part of the idea behind Skybox Imaging, a new Silicon Valley start-up, and its plan to deliver commercial imaging services in a competitive business model.

Another trend driving growth in the smallsat/microsat space is the increasing ability to combine low-cost imaging with low-cost cloud computing and mobile wireless distribution. Combined technological capabilities, such as these, will allow marketers and analysts new near-real-time data streams that they can use to promote and manage critical business functions like marketing and infrastructure management.

5) Total Cost of Ownership (TCO) for Smallsats is Going Down
With costs being roughly an order of magnitude less than traditional satellite models, and complexity being reduced through distributed processing and cloud computing, the TCO is plummeting. Companies might finally begin incorporating small satellites into their technology environment just as they would mobile phones or appliance servers. TD

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