THE FINAL (BUSINESS) FRONTIER
Space tourism and satellite launches compete for profits
The race to launch a successful private space business has been won – and the victor, surprisingly, is not Virgin’s Sir Richard Branson, but a 40-year-old internet entrepreneur from Pretoria, South Africa.
Elon Musk, who became a billionaire from co-founding PayPal, has successfully flown three flights of tourists just over 200 kms into space in his Falcon 9T rocket – an orbital flight high enough to escape the earth’s gravitational pull and to give the astrotourists an experience rated “worth every cent!”
More importantly, SpaceX rockets have been shuttling cargo and crew to the International Space Station for NASA, and launching satellites at a fraction of the Space Agency’s cost.
Nonetheless, there’s no shortage of space tourists, with hundreds of would-be astronauts lining up for reservations. Prices are expected to fall further as competition heats up.
Richard Branson’s Virgin Galactic issued a surprisingly warm congratulatory message to Musk – and announced their sub-orbital flights would be cut by US$ 50,000. And more than 19 other launch and tourism companies are still in the race, including the recently privatized Russian space effort.
“Tourism is only the tip of the iceberg,” says astrophysicist Professor Marvin Gillidge. “No doubt we will see space hotels and the like soon – but the real prize is space business and industry. Whoever can move people and goods cheaply and efficiently into space will become our first earth trillionaire.”
Gillidge is overreaching, but points to data communications, research and zero-G nanotech as the great business opportunities. And broadcasters and telecoms operators are quietly ecstatic.
Virgin Galactic is also eyeing the lucrative satellite launch market, as a host of GPS and data satellites need replacing. But Musk is confident his proven re-usable rockets will remain the lowest cost launch solution.
ANALYSIS >> SYNTHESIS: How this scenario came to be
The Final Frontier
Space has always ignited Man’s imagination. It was on 12 April 1961 that Soviet cosmonaut Yuri Gagarin became the first human in outer space and the first to orbit the Earth. Nine years later American Neil Armstrong stepped onto the moon. The race had started!
American businessman Dennis Tito became the first ‘fee-paying’ space tourist in 2001, followed a year later by South African Internet billionaire Mark Shuttleworth. Both paid more than US$ 20 million for their experience. It was inevitable that business, and not just governments, would start turning its attention to space. That same year – 2002 – another South African Internet billionaire, Elon Musk, who had made his money as a co-founder of PayPal, launched SpaceX, a company aimed at both space tourism and commercial exploitation of extraterrestrial opportunities.
The big breakthrough came in 2004 when the SpaceShipOne, designed by Burt Rutan of Scaled Composites, won the US$ 10-million X Prize, as the first private company able to reach and surpass an altitude of 62 miles (100 km) twice within two weeks. The altitude is beyond the Kármán Line, the arbitrarily defined boundary of space. The same year, British adventurer and entrepreneur Richard Branson launched Virgin Galactic in partnership with Burt Rutan, and started taking bookings – at US$ 200,000 each – for future space flights for tourists. The first hundred places were sold out within months.
In 2009 NASA tested a new rocket called the Ares, designed to take crew to orbit, the International Space Station, and eventually the Moon. But the Augustine panel, convened to review the economic viability of human space flight, proposed that the time had come for private enterprise to get a foot in the door of actual service delivery in low-earth orbit, carrying humans and cargo to the ISS.
So the race progressed, with more than 20 private companies vying for the prize of being the first successful private space business….until now! More than 12 years of investment and effort have rewarded Elon Musk’s SpaceX company, and three successful flights on his new craft, the Falcon 9T, have been operated in the past month alone.
Business has its eye on space – and the New Frontier is opening.
2002: Elon Musk founds SpaceX
Raised in South Africa, internet billionaire Elon Musk takes his profits from the sale of PayPal to eBay, and starts a space launch company. His ambitions are huge – to become the first privateer launching satellites, and people, into orbit. SpaceX is born.
2004: SpaceShipOne flies 100kms high
Piloted by South African born Mike Melvill, Burt Rutan’s experimental craft gets out of the atmosphere, and into the record books. The feat is repeated two weeks later, winning the Ansari X Prize.
Richard Branson immediately jumps onto the space wagon.
2009: Stimulus required
“If you want to stimulate the economy, what could possibly be more invigorating that pushing harder on space development? The money we invested in space in the 1960s led directly to the home computer industry, global positioning satellites and the kind of miniaturized electronics that have brought us cell phones and microprocessor chips.” So says Ben Bova, author of more than 120 books.
The global financial crisis has curtailed many lofty ambitions, even put the brakes on NASA, but there’s more white space available for innovative entrepreneurs. Virgin Galactic forges ahead with development of SpaceShipTwo, while SpaceX successfully launches a Malaysian communications satellite into orbit.
But these entrepreneurs are driven by more than the desire to have some fun and see their rockets zoom up into the sky. There are profits to be made, and big ones at that.
2011: Goodbye Space Shuttle
The remaining three Space Shuttles are finally retired. They were just too expensive to operate. Each Shuttle launch costs about US$ 450 million in direct costs. By comparison, SpaceX is getting to low earth orbit for around US$ 8.5 million and putting heavy loads in geosynchronous orbit for US$ 44 million. And still turning a profit.
2013: Virgin Galactic takes off
After nearly 10 years of development and manufacturing SpaceShipTwo finally gets off the ground – and into space. But the system is only designed for sub-orbital flips, and safety is a major concern. Testing to prove the reliability of the design goes on and on. The prospect of quickly progressing to weekly flights – and profits – dwindles.
2015: SpaceX wins the race
Launch prices are declining as the space business ‘matures’. That means more choices for digital communications – everything from television and voice calls to Skype video and augmented reality. It’s getting cheaper for everyone, everywhere, anytime.
With several re-supply and ‘taxi’ trips to the Space Station under its belt, and a satellite launch manifest as long as your arm, SpaceX is clearly the first private space company to claim success. And now they have passengers lining up for that ultimate thrill – going round the world in 80 minutes!
Warning: Hazardous thinking at work
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