Would a Reusable Falcon Hurt SpaceX?

What happens if SpaceX is successful at achieving its Falcon reusability goals.  Here is the video of SpaceX’s plans to recover and reuse the majority of its Falcon launch system.

Let me make some assumptions about a Reusable Falcon (R-Falcon) to make my point that such a system may pose challenges for SpaceX.

On the surface, an R-Falcon would be great.  If my assumptions below are accurate, only $16M per flight, a flight every 30 days, only two thousand dollars per KG.  From a consumer perspective this would be great!  SpaceX is adding reusability to the large rockets they already have.  And they will probably be successful at it.  They do seem to achieve what they put their mind to, however, could there be an easier road to reusability?  Let’s explore the possibility.  First what could a large reusable system like SpaceX’s look like (dollars values in millions)?

  

I am still amazed we can’t build Saturn V’s today.  We built them before.  We went to the moon in them for goodness sake!  We knew how to build them…why don’t we know now?  Two major reasons:

1. We don’t have the tooling/plans – long since destroyed or lost
2. We don’t have the knowledge – the NASA/contractor engineers have retired/passed away

 Surely such a reusable system like the R-Falcon could avoid these Saturn-V pitfalls…right?  If you look at the table above you see I estimated SpaceX builds eight initial R-Falcons.  This high number addresses the unknowns about number of flights per R-Falcons.  Will it really be 10 flights per vehicle as I estimate?  And how long will it take technicians to refurbish and integrate the next payload? 6 weeks?  8 weeks?  With flights every month and 6-8 week refurbish and integration windows, multiple R-Falcons will be needed.

So here is the problem.

After the initial push to develop the R-Falcon fleet, at the usage rates outlined in the table, you would NOT NEED TO BUILD another R-Falcon for 6.5 years!

So SpaceX could avoid throwing away their tooling (unlike the Saturn V), but could they keep a knowledgeable team around ready to build the next R-Falcon 6.5 years after the first fleet was completed?

And even if you believe eight R-Falcons in the initial fleet is too many and want to reduce the fleet size, demand rates of one per month means SpaceX would only need to make approximately one R-Falcon per year to keep up with demand.  Not exactly mass production – 1 vehicle per year.  Can you keep the production team “sharp” on 1 vehicle per year?

How can it be, as a consumer, I love the R-Falcon (yay $2k per KG), but as a business, could the R-Falcon be a bad way to prove a reusable launch vehicle?  Could the R-Falcon launch too much payload and launch too infrequently?

Let’s talk about an alternate business approach that could address some of these challenges.  I said above that my hypothetical R-Falcon has two problems:

•  Launching too much payload
• Launching too infrequently

How could a new hypothetical company do reusable launch better?  What if you launch less mass but launch more often?  So let’s make up a hypothetical launch system – the “Kinglet.”  Since this is a business blog, let’s not get bogged down into the technical details except that instead of launching 7,000KG per flight, the Kinglet will launch 100KG.  And instead of paying the R-Falcon’s $5M for range access per flight, the Kinglet pays $200K per flight for its range or range-like services (airport, spaceport, other?).  Here is the table for such a system (dollars values in millions).

The Kinglet is a smaller launch system but aims for a higher flight rate, targeting weekly flights instead the R-Falcon’s monthly flight rate.  As a potential customer, I do not like the 10x higher price I pay to use Kinglet ($20K per KG vice the Falcon’s $2K).  But flying weekly may be attractive to some customers.  Overall though, this appears to be bad for customers (most customers could wait a month to fly).  But from a business perspective, all things being equal, a small reusable launch system like Kinglet has a much higher probability of success because it starts small.

Where the Falcon struggled to keep its production line open with only one new vehicle per year, the Kinglet will need to produce five systems per year to keep up with demand.  Now five launch vehicles per year is still not mass production, but those volumes will, not only keep the production team sharp, but provide five times the opportunities to roll in product and production improvements into the newer vehicles than would be possible on the R-Falcon production line.

Could a smaller reusable system avoid R-Falcon's hidden pitfalls?  Maybe.

So the last question to ask is, what needs to be launched at least weekly with a mass of under 100KG? 

Here is the excel file with tables from this post if you want to change the assumptions.

SpaceWorks Nanosat Market Study

SpaceWorks Commercial today released their latest nano/microsatellite market study.  You can download it here.  The study is quite bullish on the growth of Nanosatellites over the next decade with over 20% growth per year through 2014. 

If you are a regular reader of this blog, you know I am a big advocate for Nanosats and Nanosat launchers .  But I do want to caution us that the authors of this analysis are also developing the Generation Orbit Nanosat launch vehicle.  Some may doubt how unbiased their nanosat market study can be when they are developing a vehcile to launch them.  However, the counter argument could also be, it was reviewing this same market data several months ago (now made public) that led som of the folks over at SpaceWorks to start Generation Orbit in the first place.

Here are a few highlights from the report.  Note many of these comments are direct quotes from the SpaceWorks study itself:

• 180 known future nano/microsatellites to launch by 2014
• Range of 100-142 nano/microsatellites (1-50kg) that will need launches globally in the year 2020 (verses 23 in 2011)
• 32 are estimated to be 11-50kg satellites
• 68 are estimated to be 1-10kg satellites
• 75% expected to be foreign or academic payloads
• Military growth accounts for the majority of the delta between the 100 launch estimate and the 142 launch estimate for 2020
• New Program list of Known NanoSats:
• QB50 – 50 Cubesats to be launched between 2013 and 2014
• NRO Colony I – 12 Cubesats to be launched over next few years
• NRO Colony II – 20-50 Cubesats to be launched following Colony I
• ALASA – 36 mirosatellites to be launched beginning in 2015
• The number satellites launched may not equal the  number of launches since many satellites are multiple-manifested
• 4.38% growth in Nano/microsatellite launch demand since 2000
• 22.5% growth (!) in Nano/microsatellite launch demand expected from 2011-2014
• Market saturation point was set at 150 launches per year (the projected 2030 value) (however SpaceWorks admits that some estimates project CubeSat launches at over 600 per year – well above their 150 launch ceiling)
• For a fee, Customers can license SpaceWorks more detailed database of nano/microsatellites

Additionally, the SpaceWorks estimates in this market study are based on growth in popularity of Nanosatellites and Microsatellites on existing launch vehicles (with the possible exception of the launches connected with ALASA).  As soon as you CAN launch every week or day on board a new generation of quick response Nanosat launchers, many new uses will be found for this class of satellite.  And many new customers, yet to be identified, will be taking advantage of such frequent access to space.

Will the Reusable Falcon 9 Kill the Suborbital Launch Industry?

With SpaceX’s announcement this week that the company would not only develop a reusable first stage for its Falcon 9 family of rockets but would make a completely reusable rocket system (I will use Clark Lindsey’s nomenclature: "rF9" for reusable Falcon 9), I have been wondering about the future of the young NewSpace companies developing reusable suborbital rockets.  Will companies like Masten, Armadillo and to a lesser extent XCOR and Virgin Galactic, survive this incursion from a well-funded NewSpace Cousin?

(the youtube video via Clark Lindsey's youtube channel.)  

SpaceX has announced the company is developing the “Grasshopper,” a 100 foot-tall suborbital Falcon 9 first stage that SpaceX’s cadre of young, talented engineers will use to test this initial piece of the rF9.  SpaceX has NOT announced any intention to commercialize the Grasshopper.  But if Masten, XCOR, and Armadillo continue to delay bringing a product to market that can reach 100KM, and SpaceX continues to develop products in its typical rapid fashion, might customers ask to buy payload space on an upcoming Grasshopper test?  

Or would SpaceX be willing to sell Grasshoppers to operators who then provide a suborbital launch service to users using the Grasshopper all before Masten has reached 100KM?  Could the unmanned Grasshopper be modified to carry passengers and compete with Virgin and XCOR?  If an operator came with funding, wouldn’t SpaceX take their money to make the modifications to "manrate" Grasshopper?

But the big money is the orbital market.  Most of the suborbital companies have expressed interest in using their suborbital experience and even their suborbital vehicles to expand current offerings to include an orbital system.  XCOR has published this image of an orbital capability.  

Virgin Galactic even took investment money from the Middle East to jump start their orbital program.  Could an rF9 meet all market demand for both suborbital and ultimately orbital launches as well?  And if they do, are the current suborbital companies doomed? 

It all comes down to money.

How cheaply could SpaceX really launch their new rF9?  We don’t know.  SpaceX does not even know yet.  But we can make some interesting estimates.   The heart of these projected orbital price reductions stems from reusing the rF9 like Southwest reuses its 747’s (which can fly commercially for 30 years with proper maintenance).  How many reuses is SpaceX planning on? 

At this point, the best data I have is a nugget SpaceX's CEO, Elon Musk, said this last week that he is targeting $500K trips to Mars as a market for his reusable craft.  

Let’s make some assumptions so we can approximate SpaceX’s reusability assumptions:

1. A price for a Dragon/Falcon 9 trip to Mars will be equal to the price SpaceX is currently charging NASA for ISS visits ($130M per trip) - optimistic assumption
2. 5 paying passengers per Mars Trip - optimistic assumption
3. 10% profit per launch
4. All maintenance and between-flight costs are included in the launch price - optimistic assumption

SpaceX breaks even after 47 flights (but that is a lot of assumptions).  here is a table to help visualize the math:

 Assuming a 47-flight amortization, what could be SpaceX’s breakeven price per KG to LEO?  Or to say it another way, how low would the suborbital company’s prices have to be to beat SpaceX?  

Again, let’s make some assumptions:

1. A price for an rF9 to LEO is the same as current LEO Falcon 9
2. Falcon 9 payload to LEO is unchanged
3. 10% profit per launch
4. All maintenance and between flight costs are included in the launch price.
5. Propellant Cost per Launch = $200K
6. rF9 breaks even after 47 flights

Based on these assumptions, SpaceX's breakeven Price to LEO for rF9 is $130 per KG or ~$1.4M per flight.  Again, here is a table to summarize how I came to this conclusion.  At the end of this post is a link to an interactive spreadsheet where you can modify these assumptions to create your own analysis.

These SpaceX prices are surely the most optimistic for the near term:

1. What if the rF9 doesn’t get 47 flights per vehicle?
2. What if between-flight maintenance costs for the rF9 are significant?
3. What if payload capacity has to be significantly reduced to accommodate rF9’s reusability elements?
4. What if near term launch demand is not high enough to fly as often as they need?

Even with the identified risks, this analysis would indicate:

• Yes, rF9 could compete against suborbital companies for suborbital market share (especially if SpaceX sells the Grasshoppers to entrepreneur operators)
• Yes, rF9 could compete against suborbital companies for orbital market share through extraordinarily low prices

So how can XCOR and Masten compete?  

I continue to be bullish regarding the utility of Nanosat-class launch vehicles.  When suborbital companies start offering orbital services (a second generation service), their initial orbital offerings would probably be within this Nanosat class - broadly speaking, payload space significantly under 100kg.  Is there still a market for suborbital companies to offer this type of orbital service?  Even if SpaceX may be able to now match (or beat) them on price?  

Yes.  Here is why:

Sometimes smaller is better.  The smaller vehicles these suborbital companies will eventually offer on orbit should:

• Be easier to "fly full"– to get the $130/KG price on an rF9, you have to wait for the manifest to fill.  Not so with a smaller vehicle.  XCOR was talking about a payload of 12-20KG initially.
• Be easier (and cost less) to maintain.
• Be launched with less integration or preparation – this advantage is the BIG one.  XCOR talks about multiple flights on the same day, taking off and landing from existing airports.  Even if the rF9 could launch that often, it will be some time before regulations allow SpaceX to fly that often - especially if they are still flying from the Cape or Vandenberg where ops tempo is measured in "launches per month" not "launches per day".

Nanosat launchers are the future, but only if their ops tempo is fast enough to justify paying a premium for preferential launch windows.  

This advantage of the small won’t last forever.  SpaceX will keep improving its initial RLV offerings.  Spaceport operations will grow to allow for more airline-like ops tempos.  So Nanosat launch operators (today’s suborbital companies) will have to keep improving too.

But there is a market for Nanosats and it hinges now on ops tempo.  There is hope.

The bigger worry…

…is in the near term.  I mentioned earlier, I doubt SpaceX will pursue commercializing their Grasshopper suborbital vehicle.  But they may be open to selling this suborbital vehicle for others to operate.  Such a suborbital operator flying the Grasshopper would have tremendous suborbital market advantages and could be a major competitor to those suborbital companies focusing on suborbital research (Masten, Armadillo, etc.).

Suborbital companies should be worried, but not panicking.  If the reusable Falcon 9 hastens the development of viable Nanosat launchers, the industry will be doubly blessed – low launch costs from the rF9 and high ops tempo from Nanosat launchers.

Here is the interactive spreadsheet so you can build your own rF9 assumptions.

Does your Mom Understand your Business Plan?

Several months ago Jonathan Goff, CEO at Altius Space Machines, called me.  ASM was preparing for a business plan “sprint” to compete in the 2011 Heinlein Business Plan competition in Silicon Valley (hosted by the Space Frontier Foundation).  Could I help with the business stuff?

Jon had been pitching his new technology – “Sticky Boom” which is a really long tube with glue pads on the end of it.  Only the tube can be rolled in or out and the glue can be turned on or off via an electric current.  Altius knew Sticky Boom had space rendezvous and docking applications (think servicing satellite, grabbing lost wrenches during EVAs, etc.), but could we wrap a business around this cool technology?

Assisting on the Altius Business plan has been a big part of my life over the last few months which is my excuse for light blogging.  

I am pleased with the result (yes, we won the $25K grand prize).  Here is Jon Goff, Altius's CEO, pitching the plan (worth watching to get a better feel for what ASM is really trying to do as a company - about 6 minutes long).

Here are a few highlights the team at Altius and I kept discussing while developing this plan:

• Is there a problem people will pay you to solve?  If not, you do not have a market.
•  An attractive Market is even more valuable than an attractive technology.  New space technology is cool to us space nerds, but markets determine how valuable company technology really is.
• Your customer is the organization that pays you – not necessarily the group that uses your product.
• Once you have found a market, be cautious before competing head to head with incumbents (those competitors already selling to your market) – how do you take market share away at the edges without drawing an incumbent response – a disruptive strategy .
• Management team – do you have the right team?  This is so important.  If you get the market and management right (and maybe a little traction), investors know that even if the product or technology changes over time, the company will have a good chance at success.  There is no substitute for the right market and the right team.
• Money: how much do you need and how are you going to get it?  Banks probably won’t lend to you (at least not at first).  Investor money is an obvious choice but have you thought about govt contracting or strategic partnerships?
• Few investors understand NewSpace (if you find one that does, keep him/her happy!).  The industry is small and in its infancy.  It is not right to expect Tech and Biotech investors to immediately understand: ISS regulations, LEO vs GEO, terminator tethers, plane changes, lagrange points, etc.  The question becomes how to present your idea in terms/images VC’s will understand while still being concise?  I recommend pitching your deck to your spouse or your mom.  If your Mom doesn’t understand your plan, VC’s won’t take the time to understand it either.  Simplify.  Simplify.  Simplify.
• The “prize” in most public competitions is the publicity and connections made as a result of winning, not in a the few dollars at stake.  This is what the Google X-Prize teams are fighting over – the media rights!  To highlight the value of publicity, here are a few of the Altius Space Machines articles that have been written since winning the prize.  Ask yourself how long it would have taken to generate this media attention without the win?

List of articles:

1. Aviation Week
2. CNBC
3. The Space Review
4. Business News Daily
5. Plus the sites that published the press release or the many posts by NewSpace blogs (thanks guys).

Business plans are like going to College – professors push you to do what you probably could not discipline yourself to do on your own.  This is why we have all-nighters finishing 20-page papers and cramming for tests.  On your own, you would just go to bed.

Business plans are great forcing functions and entrepreneurs learn a lot through the process.  I am glad I got to be apart this journey.

Here was some great advise we tried to follow when preparing the slide deck for the competition:

Pitching Hacks Preview

View more documents from Venture Hacks

XCOR's Nano Sat Launcher

At Last Week's Space Tourism Society’s +10 Dinner, I spoke with two of the founders of XCOR: Aleta Jackson (Co-Founder/Chief Technician), and Dan DeLong (Vice President/Chief Engineer). We discussed general Lynx status, customers, regulation concerns for each flight, XCOR’s preference to fly out of standard airports, etc. And then we changed gears to discuss the Lynx’s “Dorsal pod” intending to ride a top of the Lynx.

Here is an image of the Lynx without the Dorsal pod – in tourist configuration (my term).

Here is an image of the Lynx with the Dorsal pod on top – in NanoSat configuration (again, my term).

XCOR’s stated plans are to develop an upperstage that can ride inside of the Dorsal pod to launch Nano-Satellites.  the Lynx would act as a first stage to get to 100km and the upperstage would take the payload to orbit. Here is an XCOR image of an upperstage launching out of the Dorsal Pod carrying a nanosat on board (perhaps my favorite XCOR image ever).

Here are a few of the XCOR Upperstage specs:

• 76cm diameter
• 340cm long
• Mass up to 650kg
• 12kg Nanosat Payload
• 400km circular orbit

This discussion with XCOR’s founders got me thinking again about NanoSat launches themselves. The small payload market (which include nanosats) can be segmented by how time-sensitive their launch is:

• Low Time Sensitivity: Traditional NanoSatellites – a delay of a few days/weeks would be frustrating, but par for the course with rocket launches.
• High Time Sensitivity: Urgent NanoSatellites perhaps fulfilling an ORS mission for the military of disaster relief
• High Time Sensitivity: Package delivery to space stations – daily milk runs – fresh apples – critical (but small) replacement parts

I have said before how I believe package delivery to station to be a large portion of this “small payload” market because of the frequency of needed launches and ridiculously low integration requirements (how long does it take to load a bag of apples into a “no bruising” canister for launch?).

Now XCOR has a long way to go. A lawyer friend of mine reminded me last week when I was discussing this topic with him, “Yes, but XCOR has not flown their version 1 vehicle to altitude yet.” And he is right. The NanoSat launcher from a Dorsal Pod would be a Version 2 vehicle (at least), but…

…If I was to build a business to serve the small-payload-to-LEO market, I would want to secure a method to reach LEO as frequently as my customers needed. XCOR through their Lynx/Upperstage vehicle would provide an attractive solution if they can truly fly as often as they say they will be able to. It would not surprise me that, in the end, the market leader will be the company who can fly the most.

60 NanoSat Mission Ideas

AxelSpace's WNIsat-1

The 2nd Nano Satellite Symposium is being held today at the University of Tokyo, Japan. Evidently the Tsunami has shortened the event from three days to one day. At the conference, AxelSpace and Symposium organizers announced sixty entries in a NanoSatellite Mission Idea contest.

Symposium organizers list the top 32 entries (and a mission abstract).  These top 32 entries come from 22 different countries signaling (or at least hinting at) strong international demand for a NanoSat launch capability.


The Top 32 Mission Concept Titles (listed with 10 Finalists on Top):

1. Integrated Meteorological / Precise Positioning Mission Utilizing Nano-Satellite Constellation
2. Distributed Multispectral Imaging System
3. The Service for Individual to Meet Space; Future Space Funeral
4. ExoplanetSat Constellation
5. Northern Communication and GPS-based science Nanosatellite constellation mission
6. Space Advertiser (S-VERTISE)
7. Global ship monitoring using space-based AIS receivers
8. Experiment of Tethered Nanosatellite Flying with Electrodynamic Tether
9. Demonstration of Optical Stellar Interferometry with Near Earth Objects (NEO) using Laser Range Finder by a Nano-Satellite Constellation: A Cost-effective approach
10. A Global Water Pollution Monitoring Satellite System (WAMS)
11. Fire Alarm Constellation
12. Medium/large vehicle tracking system
13. Global water pollution monitoring using a nanosatellite constellation (WAPOSAT)
14. Satellite Constellation for Monitoring of Chemical Composition of Earth Atmosphere
15. Constellation of Atmospheric Density Research Experiments (CADRE)
16. Building a long-distance power transmission system that uses magnetic resonance with nano-satellite
17. EBELESAT 1
18. Disaster Monitoring Constellation using Nanosatellites
19. ELYSSAT A Nano Satellite for the desert remote-sensing
20. Fire observing Nanosatellite Constellation
21. Global orbital monitoring of nuclear facilities decommissioning - NUCLFADESAT
22. MARINE LIFE MONITORING AND PRESENTATION
23. Monitoring of on Earth Vegetation by Means of Spectral Analysis
24. Nano SOS (Space Object Surveillance)
25. NANOSATELLITE CONSTALATION
26. ODEI –C24
27. SPILL-SATCON, Satellite Constellation Mission Idea to Detect Oil Spills in Oceans
28. Radio Telescope Nano-satellites
29. Constelacion de Radio - Satelites
30. Nanosatellite Constellation for Rural Telemedical Applications
31. Silk Road Intellectual Transport System
32. Stranded Traveler Tracking System

NLV Market Analysis

Garvey's Prospector 7C

In October of 2004, I attended the Space Frontier Foundation’s conference in Southern California on the Queen Mary. There, Masten Space Systems made a big splash announcing it was joining Armadillo Aerospace in developing Suborbital RLV’s.

I remember thinking at the time, how did Masten have enough market data to make that decision? Masten, Armadillo, XCOR, Virgin, Blue Origin – these guys & gals threw their hat in the ring long before there were significant studies confirming suborbital RLV’s made “market sense”. They had vision. They had guts. Or if the data did exist, at the time, I did not know how to find it.

And now, NASA is offering a prize for a Nano-satellite Launch Vehicle (NLV) – “launching very small things quite often”. And as candidate NLV teams consider throwing their hats in this ring, the market data is a little more available for an NLV service than there was for suborbital service almost a decade ago.

This post attempts to consolidate that NLV market analysis. Of course this will be incomplete, so I need your help. Add links to other NLV market data in the comments of this post to benefit the whole group. I will skip a discussion of NASA's NLV Challenge.  Here is NASA's NLV Challenge Page  for more details. 
I have broken the NLV market analysis down into the following categories:

• NLV Market Sources
• Market Overview
• NLV Market Differentiators 
• NLV Substitutes
• Interesting NLV Market Nuggets
• Potential Market Competitors
• Market Demand Graph
• NLV Pricing Discussion
• Market Impactors

NLV Market Sources.  The authors of these study deserve your business. Buy their papers. They are doing good work. Instead of at the end of this post, I wanted these links near the top!

• Foust, J. 2010. “Emerging Opportunities for Low-Cost Small Satellites in Civil and Commercial Space”
• Foust, J. 2008. “If you Build It, Who will Come? Identifying Markets for Low-Cost Small Satellites”
• Christensen, I, et al. 2010. “Market Characterization: Launch of Very-Small and Nano Sized Payloads Enabled By New Launch Vehicles.” This link will give you the first few pages, have to buy the full version.

Market Overview.  The NLV market can be dissected in at least two ways: (1) by payload size and (2) by payload type.

Payload Size. I have heard various naming conventions for small payload launch vehicles.  For this blog post, I will use “Nano”, “Micro”, “Small” as three payload sizes to consider.  However, I will group them all together and use the name NLV most of the time.

• Nano - Under 10kg
• Micro - 10-100 kg
• Small - 100-200 kg

NASA is focused on a 1kg payload for its NLV Challenge. The Army is interested in at least 20kg payloads. Even if first generation vehicles are only able to launch a few kg of payload, commercial NLV ventures would be wise to endeavor to grow to larger payload sizes over time. Current 200-400kg payloads launched currently on larger vehicles would surely be interested in "going on a diet" if an NLV launcher could carry 100-200Kg yet offer more frequent launches.

Payload Type. The second NLV market subdivision will be the option of (1) launching a functioning satellite or (2) delivering cargo to stations or depots. Of the two, cargo delivery may very well be the larger of the two sub-markets. It will take far less preparation to send the ISS an NLV-load of fresh apples than it would be to fund, develop, integrate, and launch a nanosat. Both satellite launches and cargo delivery will be sub-markets. Expect the satellite market to retain a diversified customer base. Expect the cargo delivery customer base to be dominated by station owners in the early days (ISS partners and Bigelow), but to expand to Space Station customers in the not so distant future (see: NanoRacks).

NLV Market Differentiators.  What makes an NLV unique? An NLV won’t be able to carry as much payload to orbit as its bigger cousins, why would any customers want to use an NLV?  Answer: Frequent launches, low integration time.

• Cost: Higher Cost per LB than larger launchers but lower Cost per launch
• Launch Frequency: Launch *much* more frequently than larger launchers (weekly? Daily?)
• Launch Lead Time: Integrate payloads in less time to take advantage of more frequent launches
• Payload Mass: a few kg (at first)
• Orbit Choice: Customers can choose since not a secondary payload
• Suborbit/LEO/GEO: Limited to LEO (at first) – Suborbital applications? Maybe.

NLV Substitutes.  Prices for NLV’s cannot be set independent of substitutes. Here’s a list of some big ones:

• Launch as secondary payload. Spaceflight Services (Andrews Space) offers a turnkey solution for your payload to fly on the BIG rockets as a secondary payload.
• Hosted payloads. Boeing just launched a new service to combine your payload with others on a single satellite bus thus reducing customer costs since they do not need to procure an entire satellite. Note: this would be a substitute only for satellite payloads, not for cargo payloads
• Commercial RLV suborbital spaceflight. Masten, Armadillo, and Blue Origin are stuck at 100km for now, but not for long. Watch as future generations of their vehicles climb higher and higher giving customers a greater flight-time, frequent launches, and very low costs.
• With COTS deliveries to ISS approaching, deliveries to station will be made by NASA several times per year with ISS partners also delivering cargo to station several times per year.

Interesting NLV Market Nuggets.

• Microcosm Inc, identified potential market-wide launch savings of more than $15B over a 12-year period, resulting from the development of a low-cost responsive launch vehicle focused on the SmallSat market (above 100Kg)
• In a 2008 presentation, Pete Worden said there were ~80 universities with active cubesat (nanosat) programs 
• A 2006 Futron Study identified over 30 markets in 6 principle areas for services provided by low-cost satellites in the 100-200 kilogram class
• The US Army is interested in Nano Launch and had put a price point of $1M per launch.
• My interview with the CEO of CubeSat component manufacturer Clyde Space revealed he thought $250K for a 3u is definitely too much for most customers.
• My interview with Professor Jordi Puig-Suari from Cal Poly and professors from MIT, and St. Louis University who are currently active in either university satellite development or active in space research of some kind show they are targeting a price point under $50K per CubeSat with $20K being preferred. Relooking at my notes from those interviews, at a $20K price point, these professors thought the US demand for CubeSat launches would grow to 50-100 each year. Interesting they thought the low flight opps of the current “secondary payload” system a bigger problem than the high cost. Prof Michael Swartwout said in my interview with him, he waits 5-7 years to secure a spot on a rocket to launch his CubeSats. This is longer than an undergrads college career – not too inspiring for young engineers!

Potential Market Competitors.  Non-exhaustive – From the Paper: "Market Characterization: Launch of Very-Small and Nano Sized Payloads" by Christsensen, et all. 2010.

Market Demand Graph:

This graph is incomplete but should convey the significant number of different areas where an NLV could gain market share. For an explanation of these categories I would encourage you to get a copy of the wonderful papers I list under the “sources” section of this post.

NLV Pricing Discussion.  A major portion of any market analysis is not just what the needs are but what are potential customers willing to pay to meet those needs. For the NLV market you have customers at different ends of a spectrum. Government customers like the Army have stated a willingness to pay $1M to place 20kg in LEO. Universities want to keep Cubesat costs (usually 1-3 kg) to under $20K per U.

Variable Pricing seems like the right answer, where Primary customers pay a premium to fly on their schedule to their orbit and others willing to fly “standby” get a much reduced price but operate on someone else’s schedule and flies to someone else’s orbit. Rather than rewrite the variable pricing details now, here is the post I wrote on variable NLV pricing a few months ago.

If you made me guess right now, I would assume the following prices per U would be acceptable by the market:

• Government: $50-200K per U (with discounts per U for larger payloads)
• Academia: $20K per U
• Commercial: ???, perhaps somewhere between

Market Impactors.  Any market has externalities to the market that can help or hurt the industry. Here are just a few:

• Of all of the substitutes available to the NLV market, the one that has most potential to steal market share is the second or third generation of suborbital RLV’s. As mentioned earlier in this post, a subset of the NLV market could be served with the extended micro-gravity offered by suborbital RLV’s flying to 500 or 1000 km. But the opposite is also true, a delay or accident affecting the un-manned portion of the suborbital RLV industry (primarily Masten, Armadillo, and Blue Origin) could make some customers consider launching on an NLV rather than waiting for the suborbital ride. 
• One of the two key sub-markets for NLV’s will be package delivery. More successful space stations, more package delivery. The proliferation of commercial space stations will be a major driver of this sub-market
• How the last mile problem gets solved will directly affect the viability of micro package delivery (one of my two submarkets). We need solutions for the last mile problem – the solution will be part technology, part policy, part management. If NLV packages can’t be routinely delivered to space stations, the NLV industry will be severely hampered and space stations will miss out on an enabling method to gain just-in-time deliveries.
• NLV’s only work as a market if they can launch frequently with low integration turnarounds. Even if low costs had to come later, the ability to launch frequently with streamlined payload integration will be the driving force behind early NLV success stories. The question operators will need to ask is, “How do I design and manage NLV operations in such a way to achieve the goals of frequent flight opps and low integration turnarounds?”
• Although depot development is still years down the road, the potential “match made in heaven” between depots need for frequent propellant deliveries and NLV’s ability to fly frequently should not be overlooked…but I would not build a business plan around depot assumptions just yet.

That is a good dataset to start.  I will add some commentary in future posts.  Here is the spreadsheet containing the tables used in this post. 

Now I welcome your additions.  Use the comments section to your links to even more NLV market data.

New Space Solutions to the Military's Wargame Problems

A ClydeSpace CubeSat

The Feb-11 issue of the Air Force Magazine discusses a recent wargame conducted at Schriever AFB. The US Military has problems defending space. This wargame highlighted that. I see two specific opportunities for New Space to help solve the US military’s problem .

First a summary of the 2010 Schriever Cyber and Space wargame.

• The Year is 2022.
• A small US ally takes a “local action”, to which a US “peer” rival take offense (they went out of their way not to say “China”, instead “peer rival”, but I am going to say China so this post has a more conversational tone. To my friends in China, please do not take offense).
• China retaliates by knocking out the US ally’s cyber and space capabilities
• The US assists its ally in attempting to restore these cyber and space capabilities
• China views these US actions as hostile and preemptively hits US cyber and satellite “enabler” capabilities. By denying these “enablers” the other US military branches are severely hampered (you try to fight a war without a web-enabled computer, GPS, or other satellite communications.)

Schriever Wargame Observations:

• Cold-War Deterrence theories are ill-suited these new domains (cyber and space)
• Cyber war and Space war is instantly global – there is no easy way to keep these conflicts regional.
• US has many peer rivals when it comes to offensive/defensive cyber and space capabilities. The US lacks the domain advantages it enjoys with ground, air, and sea capabilities 
• The US had a difficulty reconstituting space capabilities once those systems had been targeted (lack of ORS)
• Attacks on Cyber and Space systems created a very thick “fog of war” with no clear alternative methods of gaining information
• If our enemies removed our cyber and space capabilities our first action would be to seriously consider removing theirs (the advantage of these systems is so large)
• Because they are enablers, attacking Cyber and Space were the first targets chosen by the enemy
• Space Situational Awareness was significantly lacking.

Military Takeaways?

• Military Takeaway #1: Create Joint-Sats. Group the capabilities of many nations/companies on a single satellite – this way an attacker would have to “ponder the fallout of collateral damage” prior to attacking a space asset. This idea may have some merit, but feels more like the military is hiding behind other nations and corporations. If the military was already worried about such cyber/space conflicts turning “global”, such joint ownership of future satellites will only exacerbate the problem of turning such conflicts into “global” ones.
• Military Takeaway #2: Enhance space situational awareness: develop a CSpOC – a Combined Space Operations Center to integrate the space data coming in from Government, Commercial, and foreign ally sources. I like this idea. This shows the military’s willingness to admit they will need the help of civilian and foreign sources to defend the cyber and space realms. However, can’t the JSpOC do this? I don’t know enough about the JSpOC, but since they already do so much space asset tracking, expanding the JSpOC’s capabilities may make more sense than adding a new group. But again, I fully admit I don’t know enough about this to recommend one way or another.

So how can New Space Help?

I will focus my comments now to the space domain. I see two major product/services that New Space could offer in the near term to help the military avoid the hypothetical results of the 2022 Schriever wargame.

(1) NanoSat Launch Vehicles would offer the US the ability to quickly launch new satellites (100kg) to replace assets that are damaged or temporarily offline. The military’s wargame conclusions that by bundling satellite capabilities from several countries would deter an enemy, puts significant trust in your enemy not to come over the high wall you setup. But what if the enemy does escalate, what if they do attack those “joint-sats”? Such a policy does not solve the problem of a determined enemy. Being able to launch new satellites at will is perhaps the best defense to any anti-satellite weapon. I’m not the first to advocate this. I was just surprised by how little this solution was mentioned as a remedy for the US military’s poor performance in the wargame. I believe such an NLV is within the capabilities of new space (NASA’s NLV Challenge starts soon). If the NLV could launch on very short notice, there is no doubt in my mind that the military would be an eager customer.

(2) OBSERVER CubeSat: Perhaps the best deterrence from a space attack is Space Situational Awareness. The US military is worried about how to “attribute actions” in space – basically answering the question, “who is shooting at me?”  Here is one example, the military is worried about the idea of “grappler spacecraft” (among other ASATs) launched by peer adversaries months/years before a given conflict. When called into action the grapplers adjust their orbits (which have been benign up until now) and attach themselves to US military satellites disrupting their functionality. If the grapplers had been launched at the start of the conflict, figuring out who owns them would be fairly straight forward (thank you JSpOC). But if the grapplers had been launched months or years earlier, a small orbit adjustment just prior to attack may not be noticed by ground tracking stations making a surprise anonymous attack on US space assets a real possibility.

**What the US needs is a way to view their own satellites in space.** Can a cubesat (6U, 12U, or ESPA ring) fulfill such a mission? Can a New Space company build me an OBSERVER?

• A Cubesat with HD Video camera launched to LEO well before a conflict started (immediate market)
• One or two OBSERVERs per satellite the US military wants SSA on (perhaps two OBSERVERS per military sat for redundancy)
• Stay back far enough to avoid collision risk with very expensive Govt satellites
• Too small to be targeted by ground lasers or grappler spacecraft
• Carry a suite of observation technologies focused not on earth, but only a few hundred meters away on their target satellite
• Yes, rendezvous
• No, Docking
• Not even precision flying, but almost. OBSERVERS would need to be able to modify their orbits as needed to provide alternate views of its assigned target
• Once the OBSERVER can service LEO customers, how about version 2.0 to service MEO, and GEO?

The year is 2022, with OBSERVERs in place near all high value LEO military sats (now being launched on NanoSat Launchers), US adversaries know that any sneak attack in space using space assets would be caught on video. If an attack does occur, NLV’s can be launched quickly to temporarily replace lost US capabilities. The military can attribute actions and the effectiveness of ASAT weapons is severely hampered. Thanks New Space.

NanoSat Launch Vehicles: Vertical vs.Horizontal Integration

I have been talking a lot about NanoSat Launch Vehicles lately.

We spoke about the last mile problem: how to use an NLV to deliver “just in time” supplies to orbital stations.  We spoke of a variable pricing model that would charge NLV customers commensurate to what they could pay (and increase launch demand in the process).

In all of the excitement over SpaceX’s Tremendous achievement yesterday, it was easy to miss Altius Space Machine’s announcement about their recent contract to develop NanoSat Launch Vehicle tanks. Quoting from ASM’s announcement,

“I’ll be using this tank to validate some of the low-cost, lightweight manufacturing techniques that could be used for other low-pressure tanks, like pump-fed propellant tanks for suborbital vehicles or nanosat launchers. Once the development of this system is completed, it should provide a low-cost, highly capable propulsion system for high-end nanosats and microsats.”

SpaceX is vertically integrated and associates much their success to this approach – developing all aspects of their product in-house (or limiting external component suppliers).

As NASA’s NLV Challenge heats up, NLV Challenge teams are going to be faced with the same decision: do they develop all components of their NanoSat Launch Vehicle in-house or utilize suppliers like Altius Space Machines, Team Phoenicia, and others to create a vehicle capable of winning the prize.

Over the coming months I expect to see NLV Challenge teams fall into two groups:

1. Vertically Integrated Teams: Some will follow the SpaceX model – building every component internally, controlling the supply chain. Advantages of this approach are ease of integration and schedule control. Disadvantages of this approach: Cost growth with low production volumes (perhaps cost savings with high volumes, but this would case specific), and the opportunity cost of developing components that could be purchased by others. Opportunity Cost is what you could have done with your time or money if you weren’t vertically integrated (and in such a competition, “first to market” may win it all).
2. Horizontally Integrated Teams: Others will see an advantage of utilizing hardware developed by others. Since I expect the NLV Challenge winner will utilize several vehicle stages (Paul Breed is considering a three stage nanosat launcher), this group of competitors will outsource some stages (or components of stages) and build other stages in-house. With Horizontal Integration, the Advantages and Disadvantages are reversed. Advantages: Using components built by suppliers may get you to market faster/cheaper, and may help you raise angel funding if you can leverage pre-existing supplier hardware when pitching to investors.  Disadvantages: Integration and Schedule risk (which could be a HUGE risk for any NLV Challenge competitor)!

Jon Goff, founder of Altius Space Machines, will be on the Space Show on Monday, Dec 13. I will be listening for hints of what lightweight systems Altius may be considering that could help those considering the horizontal integration approach.

Disclaimer: I have become friends with Jon Goff from his blog, Selenian Boondocks. I have re-read this post and think the content is free of too much bias, but you be the judge.  Regardless, it should be a good Space Show interview.  Check out the Space Show's archives after Dec 13 if you can't listen live.