ENTERING A ‘NEWSPACE’ ERA:
What Might Be Expected
From Satellite Miniaturization?
Lucien Rapp,
Victor Dos Santos Paulino, Adriana Martin
Space Institute for Research on Innovative Uses of Satellites
Toulouse Law School & Toulouse Business School
University of Toulouse - France
3rd Manfred Lachs International Conference
“NewSpace Commercialization and the Law”
Montreal, 16-17 March 2015
Scope
• The proposed paper is inspired by a SIRIUS exploratory note
(to be published), based on a qualitative approach and
information collected during five months (April – September
2014)
• The methodology chosen was interviews with professionals
and experts in space industry and a case study
• The SIRIUS case study was in-depth examination of three
firm strategies (SSTL, Skybox Imaging and Iridium)
2
New Comers in Space Industry
To name a few …
• On the North American market : Skybox Imaging (2009/Google),
Planet Labs (2010/Cosmogia Inc.), NovaWurks (2012), OmniEarth
(2014), UrtheCast (2014), GeoOptics (2013), SpaceX (2002/Google
as a shareholder), Garvey Spacecraft Corp. (2000), Silicon Labs
(1996)
•
• On the European market : NovaNano (2011), Clyde Space (2005),
Gomspace (2007), Deimos Space (2006), Dauria Aerospace (2011),
Virgin Galactic (2003), Swiss Space System (S3) (2012)
3
In Common …
They …
• have started manufacturing, launching and/or operating
small, relatively inexpensive satellites into space, those
small satellites evolving from student projects at
universities to projects by companies and government
agencies
• have attracted development efforts by companies and
organizations, particularly as advancing technologies are
enhancing the capabilities of the existing space-crafts
• are yet delivering innovative commercial services, which
was once the exclusive domain of
governments/institutional.
4
Small Satellite Class
and their Mass Range
Small Satellite Class
Mass Range
Mini-satellite
100-500 kg
Microsatellite
10-100 kg
Nanosatellite
1-10 kg
Picosatellite
0.01-1 kg
Femtosatellite
0.001-0.01 kg
Nano/Micro Satellite Market
The average growth of nano/micro satellites
• was 37.2% per year over the last 4 years (2010-2014),
and it
• is expected to be 23.8% over the next 6 years (20152021), mostly for earth observation and commercial
applications
More than 400 nano/microsatellites will need launches
annually in the year 2020 and beyond
(SpaceWorks, 2014)
Questions
• Are those new entrants redefining the space market
and becoming a threat to the existing firms in the
space industry?
• Could small satellites be characterized as a ‘disruptive
innovation’ that could overturn global space market
conditions?
• Would existing firms in the space sector, as
incumbents, start facing an ‘innovator’s dilemma’
(Clayton M. Christensen)?
7
Conceptual Framework
Six assumptions (from a review of the academic litterature) :
• New entrants must be identified in space industry
• Satellite miniaturization must meet the conditions of a disruptive
innovation
• A complement innovation (‘complementor’) must appear to boost
satellite miniaturization disruptive innovation
• A path dependency must be observed in the existing firms (Innovator’s
Dilemma)
• Existing firms must implement open innovations
• New entrants must in turn practice open innovation
8
Are there new
entrants in space industry ? (Yes)
Firms
Location/HQ
Year Founded
Main Product
Main Application
SSTL
UK
1985
Small satellite
EO, Navigation, Telecommunication,
Research
Satrec Initiative
Korea
1999
Small satellite
Earth Observation
Deimos Space
Spain
2001
Small satellite
Earth Observation
GeoOptics
California (USA)
2006
24 small satellite constellation
Environmental, Weather Monitoring
Gomspace
Denmark
2007
Nano and cube satellite
Research, Low-Cost Science
Clyde Space
Scotland
2008
Nano and cube satellite
Research
Skybox Imaging
California (USA)
2009
24-satellite constellation
Earth Observation
NovaNano
France
2009
Nano satellite
Earth Observation
Planet Labs
California (USA)
2010
100 cubesat constellations
Earth Observation
Tyvak-Nano Satellite System
California (USA)
2011
Nano and cube satellites
Scientific Mission
Novawurks
California (USA)
2011
Hyper-integrated satellite
Space Exploration
Dauria Aerospace
German, Russia
2011
Small satellite
EO, Communication, Navigation
PlanetiQ
Maryland (USA)
2012
12-24 small satellite constellation
Weather Monitoring
OmniEarth
Virginia (USA)
2013
18-small satellite
Earth Observation
Are Small Satellites
a Disruptive Innovation? (Yes)
A disruptive innovation
Small satellites
•
Has inferior performance as compared to
existing product
•
Lifetime ranging from a few months to 5
years (compared to 15 years of traditional
large satellites)
•
Serves a market segment that did not exist
before and which
•
Address a different, underserved still
marginal market (sumpler, cheaper, non
competitive accordin to traditional space
market parameters)
•
Is ignored by existing firms (due to very low
profit margins)
•
Existing firms not concerned by small
satellite business, so that new entrants can
take the business with unusual business
models (standardized space qualified
spacecrafts components via an online shop
to individual customers)
Does a complementor
exist for small satellites? (No)
List of launch vehicles available for small satellites to go to low-earth orbit
Launch Vehicles
Company (Country)
Capacity to Low Earth Orbit
Taurus
OSC (US)
860-945 kg
Pegasus
OSC (US)
450 kg
Minotaur
OSC (US)
1700 kg
PSLV
ISRO (India)
1300 kg
Shavit
IAI (Israel)
340 kg
Dnepr
Yushnoye (Ukraine)
3600 kg
JAXA (Japan)
1200 kg
Yushnoye (Ukraine)
4000 kg
Epsilon
(not yet operational)
Cyclone
(not yet operational)
11
Is path dependency
observed in the existing firms? (Yes)
Space industry
• Is still strongly dominated by governmental programmes
• Does not have yet a market structure based on full competitive
free market
• Is naturally high risk adverse (« failure is not an option »)
• Leaves little freedom for innovation (not strictly needed for
mission success),
• Gives rise to technically conservative behaviors from space
engineers and project managers (a strong inhibitor against
fundamentally new approaches)
Do existing firms
employ open innovation? (No)
Outside-In:
o
o
o
o
o
o
o
Leverage other industries: agile aerospace (to
be done like in software industry: release
early and often), analytical platform for big
data (from the internet), use smartphone
flash memory, simplify testing (not typically
done in traditional space industry)
Using COTS: not space-proved components
or ready-to-buy components (without
specific contracts or specification)
Acquisition/spin-in: to acquire new
technology
Licensing-in: to buy a patent license
Crowd-sourcing/open-sourcing: outsource
activity to the crowd
Collaboration with others
Innovation through communities/users: rely
on communities/lead users; e.g. hosted
payload
Inside-Out:
o
o
Divestment/spin-out: to pursue outside the
technology developed inside
Licensing-out: to grant a patent license
Existing space firms
do not implement
open innovation.
Do new entrants
practice open innovation? (Yes)
• Smaller teams
• Significant use of commercial off the shelf
technologies
• Crowdfunding
• A more aggressive approach to managing risk
• A great motivation to leverage intellectual
property or other industries
Discussion
15
No
Necessary Conditions
Status
i
There are new entrants
Accepted
ii
Small satellite is a disruptive innovation in space industry
Accepted
iii
There is a complementary product to complete the disruptive innovation
Rejected
iv
The existing firms are implicated with path dependency
Accepted
v
The existing firms do not implement open innovation
Rejected
vi
The new entrants implement open innovation.
Accepted
Scenario 1
Assumptions
• There are new entrants;
• Small satellite is a
disruptive innovation in
space industry
• The existing firms are
implicated with path
dependency
• The new entrants
implement open
innovation
Conclusions
•
•
Provided that the mechanisms
observed and studied in fully
competitive free markets are
applicable to the space domain,
traditional existing firms might need
to take these developments serious
and deploy proactive strategies to
include these fully into their
planning and future business
scenarios
Risk: the moment when Kodak, a
market leader in the film business in
the 20th century failed to respond to
changes in technology, choosing not
to move into digital photography
and consequently, letting others to
dominate the digital photography.
Scenario 2
Assumptions
•
There is no complementary product
to complete the disruptive
innovation
•
The existing firms implement open
innovation
Conclusions
•
•
We head to a space bubble (a severe
business cycle; a time period where
business activity increases very
rapidly - for example a lot of new
entrants show up -, followed by
sharp and rapid contraction) which
could be as much devastating as the
previous one in the early 90s.
Should it be true, this scenario might
have this time a significant impact
on the financial sphere (banks,
insurance companies, and
investment funds) in the context of
(European) bear markets
Questions?
lucien.rapp@ut-capitole.fr