Amazon.com is venturing into space, not for package delivery to the moon, but to provide Wi-Fi access to Earthlings and compete with Elon Musk’s SpaceX. The company is preparing to launch the first of its satellites for Project Kuiper, its space Wi-Fi business. These prototype satellites, positioned 311 miles above Earth, will serve as a testing ground for satellite design and performance. Additionally, Amazon will be testing the ground infrastructure’s communication capabilities with these satellites.
The launch window for the satellites opens at 2 p.m. Eastern Time and can be viewed at the designated link. United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin, will deploy the satellites using their Atlas V rocket. Amazon has partnered with three launch providers, including ULA, Arianespace (a joint venture between Safran and Airbus), and Blue Origin (Jeff Bezos’ space company).
Over the next six years, Amazon plans to deploy a constellation of more than 3,000 hardware pieces in low Earth orbit, significantly expanding its space presence. This ambitious endeavor is aimed at providing valuable insight into satellite technology and advancing the quality of space-based internet connectivity.
While it will take Amazon several years to achieve its satellite deployment goals, their foray into space is driven by the desire to offer a competitive alternative to SpaceX’s launch capacity. Regardless of the mission’s outcome, Amazon’s venture into space promises to be a remarkable learning experience for the company.
SpaceX’s Dominance in Space Wi-Fi Puts Amazon at a Disadvantage
SpaceX has established itself as a leader in space Wi-Fi with its highly successful product, Starlink. Since 2019, Elon Musk’s company has deployed an impressive fleet of over 4,800 Starlink satellites into orbit, setting a high bar for competitors like Amazon.
By the end of 2022, SpaceX had already amassed a substantial user base of approximately one million customers. Given the recent rate of user acquisitions, it is expected that this number could potentially double to two million users by the end of this year. With these statistics in mind, it is projected that Starlink’s revenue could reach a staggering $2 billion per annum, demonstrating an impressive annual growth rate of around 100%. Although the profitability of space-based Wi-Fi remains uncertain, its extraordinary growth is undoubtedly attracting the attention of Amazon.
The question of why Amazon is venturing into space is intriguing. However, history suggests that this e-commerce giant is no stranger to innovation. In addition to dominating the online retail market, Amazon has achieved tremendous success with its cloud-computing division, Amazon Web Services (AWS), which contributed around $22 billion to the company’s $134 billion second-quarter revenue.
It is highly likely that Amazon envisions space as a potential goldmine, comparable to AWS’s current success. In fact, this vision might materialize sooner than expected if Amazon decides to collaborate with SpaceX as its fourth launch provider (though it remains unclear whether these two competitors would be open to such a partnership). Unfortunately, neither company was available for comment at the time of writing.
Despite the potential opportunities in the space industry, Amazon’s stock experienced a slight dip of 0.2% in Friday’s trading session. This decline mirrored the performance of the S&P 500 and the Nasdaq Composite, both of which remained relatively flat.