
SpaceX Data Shows Loss in 2015, Heavy Expectations for Nascent Internet Service - artsandsci
http://www.wsj.com/articles/exclusive-peek-at-spacex-data-shows-loss-in-2015-heavy-expectations-for-nascent-internet-service-1484316455
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mabbo
The SpaceX internet service isn't just about building a new product- it's
about smoothing demand for SpaceX's primary business.

Space launches are a high-variability industry. Sometimes there's lots of
demand, sometimes you lose the ability to launch for 4 months because of a
minor accident (or $250m explosion...).

This internet service is a new customer who can smooth demand out. SpaceX sets
a goal for launches for a year, and gives the internet company 20% of their
launches. If they oversell, some internet launches get cancelled. If they
undersell, the internet company buys extra. Either way, booster production
remains smooth. Every other customer is afraid of using used boosters? No
problem, watch SpaceX use them themselves.

And if the internet thing doesn't turn out to be profitable? Ah well, the
capital that financed it probably came from outside anyways.

~~~
Animats
_The SpaceX internet service isn 't just about building a new product- it's
about smoothing demand for SpaceX's primary business._

Space-X's problem is not lack of demand. Their problem is that they can't keep
up with their launch backlog. Their latest stall in launches after the blowup
on the pad last September cost them about $250 million. The Falcon Heavy is at
least four years late. The Brownsville launch site slipped two years.

~~~
jusq1
Most of the payments are made upfront and for milestones hit. As in a lot of
it is paid up. The only reason that works is having the govt as a customer.

The Russians can any day drop their margins and put SpaceX out of business.
They have the tech and the track record that SpaceX will take another decade
or two to match.

SpaceX is being propped up cause NASA, Boeing, Lockheed et al have become such
dinosaurs that they can't do anything by themselves.

~~~
neekburm
>The Russians can any day drop their margins and put SpaceX out of business.

This is an argument I haven't heard before. Any sources I can read up on to
learn more?

~~~
noir_lord
I'm not sure it's true, I would also like to see the sources.

As for the 'tech', yes the Russians have a long and pretty good history with
rocketry but SpaceX has technological edges as well.

~~~
avmich
There are at least two arguments in favor of ability to keep Russian launches
cheap(er).

First if mentioned in John Clark's "Ignition!", where he says that the Russian
approach to bigger payload isn't the technology, but just the size of the
rocket - with same low-tech as something smaller. So, in other words,
technological edges aren't always translating into lower costs in this
industry.

Second is Russian's technological edges with kerosene liquid fuel engines.
Technologies are well-optimized, including costs, and are the primary used
ones for Russian space program. Not solid rockets, not hydrogen - and
comparatively little hydrazin-based rockets, at least by the number of
launches.

~~~
noir_lord
Those are interesting arguments but there isn't any evidence.

~~~
avmich
Where is the evidence that SpaceX rockets are cheapest? Just because SpaceX
says so?

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chriskanan
There is a Reddit post about the article in which the author of the WSJ
article answers questions [1]. He won't reveal where he got the information or
if he had permission to report on these numbers, but it seems like a leak.

[1]
[https://www.reddit.com/r/spacex/comments/5nqxs9/exclusive_pe...](https://www.reddit.com/r/spacex/comments/5nqxs9/exclusive_peek_at_spacex_data_shows_loss_in_2015/)

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adventured
These projections are for, essentially, a $400 billion market value company in
eight years.

The $22 some odd billion in operating income they're projecting, would likely
make them among the couple dozen most profitable companies in the world (at
that point).

I'd be very concerned that they're forecasting what they think they have to
hit to get to Mars, rather than what's realistic. Getting even ten million
satellite subscribers at $60 or $70 per month in eight years, will be an
amazing accomplishment. More likely, unfortunately, is that SpaceX achieves a
fraction of these figures by 2025 and struggles to figure out how to afford
the push to Mars (NASA co-funding is the likely solution). This goal reminds
me of the 500,000 sales goal by Tesla that's due in 24 months (they'll miss
that target by at least half). Maybe SpaceX Internet will get to 40 million
eventually - it's certainly possible - it'll take a lot longer than eight or
nine years however.

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snarfy
From the FAQ:

> It's ok to post stories from sites with paywalls that have workarounds.

So what's the workaround? The web link doesn't work anymore.

~~~
CodeWriter23
Copy / paste headline into Google. Then click in from from the search results.
Google Webmaster Rules require the exact same content delivered to the spider
to be delivered to a search user.

~~~
andrewstuart2
Have you tried that? It doesn't work for me any more. It definitely used to
but it's not worked the last few times I've tried it.

~~~
nhebb
In the past it worked best for me when I Googled the article title using
Chrome in incognito mode (in case of cookies). For some reason it's never
worked for me in Firefox. Most of the time it's not worth the hassle, so I
don't jump through hoops anymore to read paywalled articles.

~~~
stillsut
I believe they did eliminate all loopholes for one day to see how it would
affect traffic and subscriptions.

I'm able to get this article but not others. I think they might be doing more
cross-sectional A/B type tests along this line now, making different articles
available open or closed to the google-referral-loophole. Maybe even different
access to different IP blocks?

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GreenPlastic
Had a chance to buy some SpaceX stock and passed because I didn't see a path
to liquidity with the large capital requirements to get to Mars. Not for
everyone, but satellite internet is the ultimate power law play and SpaceX is
in a great position to make it a reality. However, even if it is successful,
they burn cash for 20 years with no way to cash out.

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kosei
Original WSJ article referred to in this post:

[https://www.google.com/amp/www.wsj.com/amp/articles/exclusiv...](https://www.google.com/amp/www.wsj.com/amp/articles/exclusive-
peek-at-spacex-data-shows-loss-in-2015-heavy-expectations-for-nascent-
internet-service-1484316455?client=safari)

~~~
enzanki_ars
Link for those that do not wish to use AMP:
[http://www.wsj.com/articles/exclusive-peek-at-spacex-data-
sh...](http://www.wsj.com/articles/exclusive-peek-at-spacex-data-shows-loss-
in-2015-heavy-expectations-for-nascent-internet-service-1484316455)

~~~
sctb
Thanks, we've updated the link from [https://news.fastcompany.com/spacex-
wants-to-be-an-ispand-it...](https://news.fastcompany.com/spacex-wants-to-be-
an-ispand-it-has-some-very-elon-musk-like-subscriber-projections-4028723).

~~~
lmm
You've "updated" it from non-paywalled to paywalled. Please don't.

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Rapzid
SpaceX is one of those companies I could imagine having minor setbacks with a
quarter billion dollar annual loss. I could see investors throwing money their
way just to be a part of space tech; so long as they aren't completely
imploding.

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foota
Perhaps my expectations have simply been skewed by reading about negative
billiion dollar incomes in valley companies, but It seems to me that spaceX is
doing pretty well to be in the black with such large growth. (other than this
year)

It also seems disingenuous to compare spaceX's launch history with that of a
36 year old company (Arianespace)

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Dylan16807
> The company determined the culprit was a 24-inch long strut, or low-tech
> metal support structure, that hadn’t been properly inspected.

Some of the struts they bought were 1/5 as strong as specced. I wouldn't call
that an inspection failure.

~~~
sephamorr
It was an inspection failure from SpaceX's perspective. The vendor
mismanufactured the part initially, but the failure rates of the parts were
very low (to the order of several out of a batch of 10000 units), hence they
weren't caught in batch testing. Also note that metal performance at cryogenic
temperatures is often very different. Certain impurities that are largely
harmless at room temperature can cause metals to be completely brittle at 90
kelvin. So testing every single strut would be very expensive, though SpaceX
probably does that now regardless.

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ctrl_freak
Sorry if this is off-topic, but is anyone else having trouble getting around
the WSJ paywall? The usual trick of redirecting through Google doesn't work
for me any more, even with an incognito window or using another device.

~~~
grzm
It's been hit or miss for me. Last week I was having issues, and I don't have
any with this one. Perhaps it's related to cookies or other browser cache? Or
perhaps server-side fingerprinting?

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pbreit
Rant: it's annoying when writers use "quarter of", I guess to make the number
sound bigger (in this case, quarter of a billion in losses). Even "half" is a
stretch.

~~~
Dylan16807
"250 million" has a very big sound to me. I don't really agree with your
premise, and "quarter billion" is easier to parse and flows better.

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ChuckMcM
I was idly wondering how the cost to build his Internet works if he only uses
'used' boosters. That seems like an interesting trade-off of cost/risk.

~~~
walkingolof
Not "used", "flight proven" :)

~~~
trav4225
Certified Pre-Flown ™

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jaimex2
pay wall, didnt read.

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mordant
Satellite-based Internet service sucks. High RTTs kill TCP performance.

Rain kills it, too.

~~~
ezzaf
Have you read the details of SpaceX's planned internet offering? _Existing_
satellite based internet services have high latency. This is exactly the
problem their solution aims to solve.

~~~
dragontamer
Erm, can SpaceX solve the issue that the speed-of-light is pretty damn slow?

Geostationary Orbit is 35,000km above the Earth. Light "only" travels at
300,000km per second. That's a minimum latency of ~246 ms per packet, once you
go round-trip from Earth -> Satellite -> Earth again.

Remember that starting up a TCP connection is Syn -> Syn-Ack -> Ack, which
means a minimum latency of 750ms before a TCP connection is established.
You're well into seconds+ before you can view Google's homepage. I guess this
part can be sped-up with a smarter satellite.

Anything above 200ms is damn near unplayable for video games IMO.

That's the minimum latency according to current laws of physics. If you lower
the orbit below Geostationary, then life starts to get extremely complicated
for the people down on the ground. You can't just point your dish in a
particular direction in the sky, because the satellite would be moving.

If you had a neighborhood completely clear of trees, maybe you could program a
mobile radar dish to rotate with the moving satellites as they move across the
sky (Subsynchronous orbit). But this doesn't seem too applicable to most
people's home situations.

~~~
rmccue
SpaceX's plan is Low Earth Orbit, not Geostationary:
[http://arstechnica.com/information-
technology/2016/11/spacex...](http://arstechnica.com/information-
technology/2016/11/spacex-plans-worldwide-satellite-internet-with-low-latency-
gigabit-speed/)

Latency aim is hence 25-35ms.

~~~
babyrainbow
Wonder if this issue is solved already?

>You can't just point your dish in a particular direction in the sky, because
the satellite would be moving....

