The competition between
Amazon.com
and SpaceX enters a new phase this week. The first Kuiper satellites are slated to go into low Earth orbit, launching aboard a United Launch Alliance Atlas V rocket.
The Atlas V, which can carry payloads of up to 20 tons into low earth orbit, is slated to launch Friday afternoon, Eastern time. The launch can be watched here.
Kuiper, or Project Kuiper, as it is often called, is a space-based Wi-Fi business that Amazon (ticker: AMZN) hopes will provide Wi-Fi service to people on the ground by 2024. That puts it in direct competition with SpaceX’s Starlink service, opening another front in a battle over space between billionaires Elon Musk and Jeff Bezos.
ULA is a joint venture of
Boeing
(BA) and
Lockheed Martin
(LMT) that seeks to compete with SpaceX in the rocket launch business. SpaceX’s Falcon 9 rocket has similar capabilities to an Atlas V rocket, with the extra advantage that the company is able to land and reuse the lower stage of the Falcon launch vehicle.
Musk, SpaceX’s founder and CEO, is worth some $250 billion, with the bulk of that from his stake in
Tesla
(TSLA). He owns more than 20% of the company including his stock options. Bezos founded Amazon and owns a roughly 10% stake, worth some $130 billion.
Bezos founded his commercial space business Blue Origin in 2000, almost two years before SpaceX was established. Development at his space company has been slower than at SpaceX.
Blue Origin has a commercial space tourism business and some contracts with commercial and government entities, including a deal with Amazon for 27 Kuiper launches. Amazon is also using ULA as well as Arianespace to launch satellites. Amazon needs multiple players because it doesn’t have its own rockets like SpaceX does.
Blue Origin hasn’t achieved orbital flight yet, while SpaceX dominates the space launch industry globally and has launched almost 70 orbital missions so far in 2023. That is close to half of all launches globally.
More than half of SpaceX’s 2023 launches so far have been for placing its own Starlink satellites into orbit. There are now about 4,800 Starlink satellites circling the Earth providing space-based Wi-Fi service to business and individual customers.
SpaceX amassed about one million users at the end of 2022. At the pace of recent additions, that number might be two million by the end of 2023.
At two million users, Starlink should have revenue of at least $2 billion a year, with annual growth of roughly 100%. That growth makes space-based Wi-Fi appealing to Amazon as well. How profitable space-based Wi-Fi can be isn’t known yet.
SpaceX is estimated to generate billions in annual operating profit, but that comes from a combination of Starlink and the launch businesses. Including both those operations, it is easy to project $8 billion or $9 billion in 2023 sales for the space company, although the numbers can’t be confirmed. SpaceX isn’t public and didn’t respond to a request for comment
That level of sales might not move the needle for Amazon yet, but Amazon likes to have a hand in multiple businesses. Not only does Amazon dominate e-commerce, its cloud-computing operation Amazon Web Services is enormous in its own right. AWS accounted for about $22 billion of Amazon’s $134 billion in second-quarter revenue.
Amazon, like SpaceX, hopes space can be as big as AWS someday.
Amazon stock is up about 9% over the past 12 months. The
S&P 500
and
Nasdaq Composite
are up about 15% and 21%, respectively.
Write to Al Root at [email protected]
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