Starlink’s Path to Success Part 2

SpaceX innovations have made Starlink *possible* but what will it take to make Starlink successful? In a previous post I discussed the need for SpaceX to increase the pace of satellite launches. In this post I’m going to talk about reducing the cost of the equipment.

Because Starlink satellites are in very low orbits, they move across the sky quickly and that means a Starlink customer needs an antenna that can track the satellites. There are a few ways to accomplish this tracking, including motors that mechanically steer the antenna(s) to follow the satellites. But that’s not the rout SpaceX took for Starlink. Instead, SpaceX designed a solid state phased array antenna which can digitally track the satellites without physically moving the antenna. (Note: the Starlink antenna does have two motors for aiming but those are only used for the initial pointing of the antenna so that customers don’t have to worry about how to aim, or hiring a professional installer. Once it’s pointed in the optimal direction, the motors shut down.)

The challeng SpaceX faces with this approach is cost. A phased array that talks to satellites hundreds of miles away is not a cheap endeavor. Estimates are that SpaceX’s costs for the first generation of this antenna are around $2,500 per unit. That’s a pretty steep price for a consumer to pay for equipment (though, no doubt, there are some people desperate enough for better internet service to happily pay that price.) SpaceX has chosen an equipment price of $500 and so each customer that joins Starlink is costing SpaceX about $2,000 in up front subsidies.

I think SpaceX has a short term plan to drive the costs of the phased array antenna down pretty dramatically simply by producing them in higher volume — not changing the design significantly. A next generation antenna might garner further savings through better miniaturization and design, but I think it will be cheaper suppliers, and assembly efficiencies that come with high volume that will make the most impact in the near term.

Because SpaceX chose to build a computer for an antenna (it even has an ARM CPU, along with a GPS chip, power management, and the phased array which is a bunch of RF ICs on a large PCB) we can expect the price to come down with time and new technology generations — just like laptops and phones become more capable and more affordable every year. In 5 years or so I think the antenna cost problem will be well in hand.

So, today every new Starlink customer costs SpaceX about $2,000 and with a monthly service fee of $99 that customer will not become profitable for almost two years. That’s a long time to wait for profits to start rolling in but SpaceX is in a race for customers with several other low Earth orbit internet constellations — mostly OneWeb and Amazon’s Kuiper, so I think they’re going to have to deal with this negative for the immediate future while production ramps up from tens of thousands of units to hundreds of thousands and then millions.

(It’s also possible that SpaceX will open Starlink to businesses and governments where they may not need to subsidize the antenna and in fact the price to large organizations could actually end up subsidizing residential consumers’ equipment.)

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