Bill Bennett

Menu

Can Amazon’s Project Kuiper satellite compete?

You might be forgiven for thinking that Amazon’s Project Kuiper doesn’t have much hope of competing with SpaceX in the low Earth orbit satellite broadband business.

Amazon is preparing to launch hundreds of low earth orbit satellites to host its planned Project Kuiper network.

Its rival, SpaceX, which operates the Starlink LEO satellite broadband network has been in business for six months.

By the time Project Kuiper is operational, Starlink will have had the market to itself for four years.

Starlink has first mover advantage

That’s a significant first mover advantage. In sales terms it means SpaceX can pick all the low-hanging fruit.

When Amazon starts to sell its service, many, even most, people who need or want satellite broadband will have committed to Starlink. That commitment is stronger than choosing a terrestrial broadband service.

Satellite broadband users need to buy an expensive base station before they can connect. While Starlink subsidises the cost of its base station hardware, New Zealand customer still have to pay $1040 upfront.

That amounts to a commitment bond. Customers who might otherwise consider switching to Project Kuiper will want to recover the value of their initial Starlink hardware investment before moving.

The upfront hardware has the effect of making LEO satellite broadband customers ‘sticky’.

That will be a challenge for Amazon.

Amazon customer relations

Amazon has one clear advantage over SpaceX. It has existing customer relationships to leverage.

In 2022, there are more than 200 million people worldwide signed to Amazon Prime. This includes the company’s online video and music services. Bundling these services with satellite broadband could catapult Project Kuiper towards breakeven.

Likewise, Amazon has relationships through AWS with millions of enterprise customers. Many of these will be candidates for satellite broadband.

There is a second potential advantage: Project Kuiper plans to use smaller, cheaper satellites than Starlink. Satellite broadband users tend to send far less data than they receive. So Amazon will combine the up and down antennae into a single unit.

This should translate into cost savings that may be passed onto customers.

We don’t know anything about Amazon’s user terminal yet, but the company says it will be smaller and lighter than the Starlink unit. It hints that it will be cheaper.

Based on available information, it looks as if Starlink and Project Kuiper will offer the same speeds and latency.

Life will be harder for the other companies planning similar LEO satellite broadband networks. They are further behind Amazon and won’t have the existing relationships to break into an established market.

 

 

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.