Main Engine Cut Off - T+132: SpaceX SmallSat Updates

Episode Date: September 12, 2019

SpaceX updated their SmallSat launch offering—dropping the price and increasing the number of flights. It certainly looks like they’ll be a force to be reckoned with in the small launch market. This episode of Main Engine Cut Off is brought to you by 39 executive producers—Kris, Pat, Matt, Jorge, Brad, Ryan, Nadim, Peter, Donald, Lee, Chris, Warren, Bob, Russell, John, Moritz, Joel, Jan, David, Grant, Mike, David, Mints, Joonas, Robb, Tim Dodd the Everyday Astronaut, Frank, Rui, Julian, Lars, Tommy, Adam, Sam, and six anonymous—and 269 other supporters. SpaceX - Smallsat Program SpaceX revamps smallsat rideshare program - SpaceNews.com SpaceX plans 24 Starlink launches next year - SpaceNews.com Email your thoughts, comments, and questions to [e-mail] Follow @WeHaveMECO Listen to MECO Headlines Join the Off-Nominal Discord Subscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhere Subscribe to the Main Engine Cut Off Newsletter Buy shirts and Rocket Socks from the Main Engine Cut Off Shop Like the show? Support the show! Music by Max Justus

Hello and welcome to Main Engine Cutoff. I am Anthony Colangelo and I want to talk about the SpaceX SmallSat program once again. This was something that we talked about, I guess, back in August, about a month ago at this point. SpaceX originally announced a small sat rideshare program, but then at the end of August, just a couple of weeks ago, they totally revamped the program. And I believe they really changed everything about it in a way that positions it entirely differently in the market.

So I felt like it's worth breaking down. I was working on an interview about this topic. It didn't quite pan out, so I just wanted to give a couple of quick thoughts on this, because otherwise there's not a ton going on in the way of news to analyze. It's been an interesting couple of weeks where there's just kind of like everyone getting back to work, end of the summer, people taking vacations and whatnot. So this is the topic that I've been thinking about a lot, and it's really quite interesting. So at the beginning of August, during SmallSat conference, SpaceX announced a rideshare program where once a year they would

do a dedicated flight out of Vandenberg Air Force Base, and they would do a full-up rideshare where you could pay just over $2 million for 150 kilograms. There were some different options. And even as you get closer to launch, you could still book a flight, but it gets a little more expensive. And that was interesting. It was an interesting thing that they announced. I think it was a good way to kind of pay off the Vandenberg facilities. Once a year, fly this kind of mission, make a bunch of money, pay off your overhead for the year, and you keep that pad open. You keep it, you know, neutral in terms of cost. And that's all well, you know, it's a nice little service. Well, now they've updated it and it's totally different. So they say they've done this

based on feedback from customers, but they've changed literally everything about the program. Now it's a million dollars for 200 kilograms. So it's a ridiculous cost drop there. And they've also now upped the amount of flights they're going to fly to a ridiculous degree. Now they're going to be flying once a month. You'll have a chance to fly with a Starlink mission or something else going to low Earth orbit. Mid-inclination, you can be a rideshare on those. And they're going to be doing three to four sun-synchronous orbit flights a year, the dedicated sun-synchronous orbit flight. That is a ton of increased payload up to orbit.

It takes them from being, you know, this kind of once-a-year oddity to being a fully reliable small-sat launcher. You know, it puts them at 12 or 15 missions a year almost instantly. You know, and they said a million dollars for 200 kilogram satellite and then 5,000 kilogram above that. So if you add 300 kilograms, you get to a 500 kilogram payload for $2.5 million. You go over to virgin orbit who's having their own trouble getting up and launching you're paying 12 million dollars or more for the same amount of payload and that was fine before when it was you know once a year you could get a really

good deal but now you've got a chance to do that every single month and how long is it going to be until virgin orbit is doing that every single month? For now, you know, a magnitude more in price. It really does change the way that SpaceX is positioned in this market. And you can start thinking about motives here, right? And the Vandenberg one made sense, like I was saying, to pay off the Vandenberg facilities once a year. They had some experience doing this kind of flight with Spaceflight. They've done a similar flight with STP-2 and the Air Force, where they integrated everything themselves. But now they've added this rideshare program monthly at a really low cost, and it's part of Starlink flights. So when you start thinking about

Starlink flights, and you think about a million dollars two million dollars for that extra payload on a starlink flight when you think about how much goes into a starlink flight for spacex does a million or two million dollars really change the the numbers for them there i don't know i mean obviously every million every two million helps but at a certain point you know the the numbers there the math doesn't make enough sense. So you start to be left with the idea that this is extremely predatory towards the small sat launchers that are coming online. You know, they smell blood in the water with a lot of these launchers having trouble getting

online, prices are climbing, and they have an opportunity to really crunch the market. prices are climbing, and they have an opportunity to really crunch the market. And I struggle at finding a lot of other reasons here for them to offer these flights alongside Starlink launches, of which they say they're going to have 24 next year. Previously, small sat launchers that are coming online, right? Rocket Lab's flying, but we've got a whole host of other ones that are struggling to get online. They really were only in a race with themselves. They all have delays, all of their prices are climbing, so there wasn't a ton of pressure on them other than, you know, even Rocket Lab, their price was climbing, but they're the only ones that are flying, so that's fine. The others are just really struggling to get through

their test programs and actually start flying these missions they booked. Well, now they've got coming up in a year, less than a year, six months from now, they know they have a company who's going to be flying, offering these really low prices and doing it monthly and not aiming to be doing it monthly, not doing it monthly if their testing program goes well, not doing it monthly if they have people signing up. They're going to be flying monthly and offering this price every single month. And that puts a ton of pressure on all of the small sat players out there, including Rocket Lab at this point, right? The last show that I did about this, if you go back and listen, I was pretty ho-hum about this because it was once a year. It wouldn't have a huge effect on the day-to-day market for small set launchers. But now having this,

for all intents and purposes, a sledgehammer of a mission every month at that low of a price, it starts to be a real option for somebody looking to launch a small satellite at any time of the year. And it really does change the calculus for somebody looking at options out there. As they see all these other players delayed, as they see all these other prices climbing, and you see something so low and also dependable every single month. Now, SpaceX saying that they've made these changes based on feedback, if we think about that for a second, I think the feedback they got was really massive amounts of demand. If they just got the feedback that, hey, we like that service, but it's a little too high in price.

Maybe they would just drop the price for the rideshare. The money would still work out because if they could fill that vehicle, they could still make money even half the price they were offering originally. But I think the feedback they got was much more demand than they expected to hear. And what they did was realize that they could really have a big impact here, fly them on these missions that they're flying anyway, cut the price because they know they're going to make it up in volume, and at the same time, put pressure on the rest of the market. A huge chunk of the market is these small sat players now. And if they can put pressure on them to, you know, for all intents and purposes, sort out who's going to make it and who's not earlier rather than later,

they get a huge amount of missions to fly in the next two years, two, three years, as these other players are coming online. It's an all-around win for SpaceX here, and it had to be because they didn't expect the amount of demand to be there. They probably heard from a lot more companies than they expected in the early days of that announcement. And it totally changed how they were looking at these plans. And it is a good business model. I mean, like I said, every million, every two million helps, but it does also feel like SpaceX decided it's time to really put some crunch on that small market and make it sort itself out sooner rather than later. And I don't think that's a bad thing for the market itself. Obviously, more choice is better.

But also, you've got a company here well-positioned to make a big splash in this market, so why not do it? But it does come back to a theme that I've said a lot in the last year, which is SpaceX is the big steady now. SpaceX is not the scrappy upstart. They're maintaining that mindset in some areas, but in launch services, they are the big steady. And it changes the way that they're interacting with the market. It changes the things that they're doing, the decisions they're making, the positioning of themselves in the market. And it's just important to keep ourselves in check with that over time. So I really don't have too much else to talk about right now, but I wanted to share a couple of thoughts on this revamping of the SpaceX small sat program, something that I think is going to be a huge force in the next year.

So before we get out of here for today, thank you all so much for your support. Everyone that's supporting Main Engine Cutoff over at mainenginecutoff.com slash support. You make this show possible. This episode was produced by 39 executive producers. Chris, Pat, Matt, George, Brad, Ryan, Nadeem, Peter, Donald, Lee, Chris, Warren, Bob, Russell, John, Moritz, Joel, Ian, David, Grant, Mike, David, Mintz, Eunice, Rob, Tim Dodd, TheEverDashNaut, Frank, Rui, Julian, Lars, Tommy, Adam, Sam, and six anonymous executive producers. Thank you all so much for your support. You make this show possible.

I could not do it without your support and everybody else over at mainenginecutoff.com slash support. For now, that is all I've got for you. We've got a couple of really interesting interviews coming up here on the show. So keep your eyes peeled for those. If you've got any thoughts, questions, whatever, email them to me, anthony at mainenginecutoffs.com. Thank you all so much for listening, and I will talk to you next week. Bye.