1 Amaresh Kollipara, Managing Partner, Earth2Orbit LLC Michael Leventhal, Attorney/Consultant, mc²...
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Transcript of 1 Amaresh Kollipara, Managing Partner, Earth2Orbit LLC Michael Leventhal, Attorney/Consultant, mc²...
1
Amaresh Kollipara, Managing Partner, Earth2Orbit LLC
Michael Leventhal, Attorney/Consultant, mc² The Law Firm
State of the Commercial Space Industry
2Proprietary – Do not reuse without permission.
Themes
Space is not a destination
Space is an enabler for a variety of business verticals
Space accelerates and expands business verticals by providing new, disruptive ways of doing business
• Faster
• Cheaper
• Better
Governments can catalyze and accelerate space related businesses
Infrastructure is a precursor to space-related applications
3Proprietary – Do not reuse without permission.
-Commercial Space Market Segments-Space is an enabler: it enhances existing market verticals.
In-Space &Surface
PlatformsLaunchSatellites
Infrastructure
Applications
Healthcare Earth Observation Science Research
Energy and Mining Defense
Media and Entertainment
Navigation and Communications
Governance
Transport Operations
4Proprietary – Do not reuse without permission.
-Porter’s Five Forces-Framework for Discussing State of the Commercial Space Industry
Framework developed by Michael Porter in the late 1970s which assesses competitive environment, market trends, and other
factors to determine the profit potential of an industry.
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Two Example Industry Segments
Sub-Orbital Space Tourism Orbital Launch Vehicle Segment
Not an exhaustive list of companies – examples only.
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Threat of New EntrantsBargaining Power of
CustomersBargaining Power of
Suppliers
• Low concentration of companies
• Low volume of buyers at current prices
• Cost of switching is high• Once companies are
established switching costs may be lower
• Low customer price sensitivity in the early stages
• High at first, but, as the companies become established, more suppliers, less leverage
• Companies can take manufacturing in-house
• Because of the lack of bargaining power of customers, not as important
• Technological barriers to entry
• Financial barriers to entry• Loyalty if early entrants have
solid safety record• So, Long Lead Times,
Surprise Unlikely
Five Forces Analysis
Sub-orbital Space Tourism Segment Analysis
Proprietary – Do not reuse without permission.
Competitive RivalryThreat of Substitute Products/Services
• Thus far, little competition; just branding
• Later, most companies will support each other to establish the industry
• Finally, there will be competition, but, as prices drop, demand will outstrip supply for the foreseeable future
• Extreme vacations are available now
-Titanic,
-Mt. Everest
-HALO
-Zero G,
-Antarctica
-Virtual reality space trips• BUT . . . If you want the real
thing, you have to buy a ticket
Five Forces Analysis
Sub-orbital Space Tourism Segment Analysis
8Proprietary – Do not reuse without permission.
Threat of New EntrantsBargaining Power of
CustomersBargaining Power of
Suppliers
• Low concentration of companies
• Low volume of buyers due to launch costs
• Cost of customer switching is extremely high
• Moderate price sensitivity• Low bargaining power in
current market
• High due to specialized parts and inputs
• Suppliers are highly specialized
• Low presence of substitute inputs
• High launch costs are attributable to high input costs (in part)
• Sizable technological barriers to entry
• Massive financial barriers to entry (~$200M+)
• However, low customer loyalty – they’ll go with whomever
• Policy, regulatory, and legal obstacles also prevent easy entry
Five Forces Analysis
Orbital Launch Vehicle Segment Analysis
Proprietary – Do not reuse without permission.
Competitive RivalryThreat of Substitute Products/Services
• Minimal competitive rivalry existed for decades
• New entrants are redefining the landscape
• Few companies in this industry segment, results in low competitive market behavior
• Substitute products/services do not exist
• Not many alternatives to ELVs• Disruption via substitute
products requires paradigm shift in product/service offerings.
Five Forces Analysis
Orbital Launch Vehicle Segment Analysis
10Proprietary – Do not reuse without permission.
Conclusions
Commercial/New Space Industry is slowly maturing
We can use traditional methods to analyze this industry
Fundamentals look strong
Comparing and contrasting with established industries produces insights for investors and others
As launch costs go down demand for industry will increase and diversify