The success of NewSpace has been largely based on cost savings due to miniaturization and cheaper launches. With competition harshening and the arrival of more constellations, cost efficiencies have become even more relevant.
And while we still have an unprecedented launch availability with a consistent launch schedule, and low prices compared to the situation five years ago, SpaceX, as the main launch provider, increased its prices last year. Also, with Ariane 5 out of service, Delta 4 Heavy retiring in 2024, and Ariane 6 and Vulcan Centaur both delayed, no other reliable launching system of similar capacity to the Falcon 9 (outside China) is available today. This unfortunate situation will hinder reducing the backlog of satellites waiting to get into orbit quickly for some time. However, the continued need for lowering launch costs and higher launch cadence is only one side of the equation.
Equally critical, if not more so, could be spacecraft manufacturing costs. Even at the lower end, building a single customized small satellite costs tens of thousands of dollars per kilogram. If costs remain at this level, large LEO constellations will be unaffordable unless backed by huge fortunes, such as Elon Musk’s SpaceX is doing with Starlink and Jeff Bezos’ Amazon is doing with Project Kuiper. Cost efficiencies are also needed to offset the high ongoing cost of maintaining a large LEO smallsat constellation, orbiting 500 to 2,000 kilometers from Earth, with satellites having to be replaced regularly.
They include time-to-market, where reduced lead times are money saved and sooner earned. For example, a 50-employee Earth Observation company in any advanced economy burns millions of cash before generating revenue with their satellites. The sooner they can get their satellites built and into orbit, the less cash will be required before generating revenue and reaching profitability.
Satellite operators and suppliers may have to radically change the satellite production process to achieve these required cost efficiencies. The traditional approach is geared toward customizing the platform to match the payload. This approach must be inverted if we want to reduce manufacturing costs.
For most missions, customizing the satellite platform to suit the payload takes too much time and money to be continued. Satellite operators must weigh the cost and production time difference between customized satellite production and standard, off-the-shelf satellite platforms with standardized manufacturing.
Standardization in other industries
NewSpace is far from the first industry to embark on standardizing processes and components to enable mass production. Smallsat manufacturers and operators must design their products with scalability in mind. Otherwise, they risk a similar fate as Globalstar, ICO, Odyssey and Teledesic that in the 1990s had to scale back or cancel their intended constellations because of high costs and limited demand. Analysts have been skeptical about LEO constellations ever since. Today the economics have changed. There’s more capital to invest, demand for Earth observation services and connectivity has increased, technologies and revenue sources have evolved, and costs have decreased.
Satellite manufacturers need to make sure their products are replicable. Changing the design and components often to fit the payload won’t be profitable. This “satellite-as-a-product” approach would follow the footsteps of other industries trying to keep a strong return on investment and grow quickly. Sometimes standards compliance turned into a deciding factor for buyers.
Consider the automotive industry. Today’s vans have a modular and scalable design that accommodates different configurations, allowing them to be outfitted for other applications such as parcel delivery, medical transport, grocery delivery, and recreation.
Cloud platforms, which used to be proprietary, are another example. Users often found themselves at the mercy of vendor lock-in with cost increases. Standardization made migration, portability, and integration easier and less costly.
Through standardized manufacturing processes and modular subsystems built in large quantities in advance, satellite builders could also keep the flight-proven architectures of their satellite buses consistent from mission to mission and provide cost-effective scalability. This level of standardization would lower the overall price of a spacecraft, which in turn means capital expenditure reductions for customers who can more rapidly assemble and deploy their satellites and put them to work generating revenue.
To be clear, we are not talking about full automation of the factory floor. That remains rather unlikely for satellite manufacturers, despite the large quantities of satellites needed for large constellations. But processes such as de-storing components from their controlled holding environment, checking to see if they are fit for purpose, delivering them to the assembly floor, and testing to see if they are performing as expected within the manufacturing parameters could be automated.
Of course, the key question is, are there enough constellation and satellite orders to provide this level of scalability?
The market for satellite constellations
During the last few years, many companies have launched pathfinder missions into LEO with payloads that were developed in-house, outsourced to a vendor, or fulfilled by buying off-the-shelf payloads.
These pathfinder missions allow ventures to validate their technology and services in orbit and learn what adjustments are needed before serial production of the operational satellites begins. Such adjustments mostly aim to make payloads and services more sophisticated and often entail adding components.
Medium and large LEO constellations are inching closer to becoming reality. SpaceX hopes to have as many as 42,000 satellites in this mega-constellation. As of June 2023, the company has 4,500 Starlink satellites in orbit. Planet has launched over 450 in total. OneWeb has over 200 and counting.
NewSpace researcher Erik Kulu presented another clue about the status of satellite constellations in his paper “Satellite Constellations — 2021 Industry Survey and Trends.” At that time, he counted 251 commercial satellite constellations that had been announced, with 87 having launched one or more prototypes. A further 82 were still in the development stage, and another 35 were in the design stage. A total of 35 constellations were ready to start launching. Ten had been launched, and five of those were in the replenishment phase.
Euroconsult recently confirmed this trend, predicting that “the main driver for continued growth remains NGSO constellations, driven by LEO broadband and Earth observation and the continuous necessity for replenishment launches.
Analysts at NSR, meanwhile, estimate that more than 60 percent of all manufactured Non-Geostationary Orbit (NGSO) constellations will be outsourced.
Euroconsult’s 2022 market intelligence report forecasted that 81% of all smallsats to be launched through 2021 will be part of constellations.
Interestingly, as a result of the war in Ukraine and the success of commercial satellite operators providing valuable information, Euroconsult reports that “a growing number of government agencies are considering investing in their own smallsat systems or dedicating a budget to the procurement of commercial third-party smallsat-based services, supporting growth of the sector.”
The smallsat manufacturing market, according to Euroconsult, is expected to quadruple over the next decade to $56 billion, driven by commercial and government investment in smallsat-based LEO constellations.
The market to support standardization instead of customization is there. How would these different approaches look in practice?
The differences and benefits between customization and standardization
Using cost figures for NanoAvionics’ standard and custom-built buses, let’s examine customizations versus standardization through the lens of an up-and-coming U.S.-based company that plans to launch an 80-satellite constellation.
With $20 million in financial backing and a team of 30 skilled engineers, this firm is charting a path in the Earth-observation data provision and analysis space, utilizing a high-resolution camera to detect changes on Earth’s surface and provide these insights to governmental and commercial customers.
Phase A – Initial Technology Validation:
This phase involves launching a demo mission to validate the capabilities of their Earth observation camera and data analysis tool, requiring a 16U nanosatellite bus to carry the instrument into LEO.
Analysis suggests choosing a standardized platform would result in cost savings and expedited deployment of the demo mission. Going with a standard 16U bus costs 9% less than a custom-built platform even after factoring in payload modifications and the required engineering work.
The real game-changer, however, is the potential operational savings. A standard platform can be prepped and launched in seven months — less than half the time required for a custom solution. This saves at least $3.2 million (a 16% saving on their entire capital) in labor costs and other operational expenses during this stage, and the expedited launch allows the company to start generating revenue sooner. While the demo is unlikely to bring in much revenue, an earlier start allows the operator to validate their idea sooner, calibrate with potential users, and fundraise for further scale up.
Phase B – Business Model Validation:
Following a successful in-orbit demo, the company plans to roll out a beta version of its service with three satellites, marking the onset of Phase B. This phase sees increased payload and data complexity, necessitating a shift to a larger satellite: a 100-kilogram microsatellite bus, in our analyzed case.
A custom-built solution for these three satellites would cost 8% more than off-the-shelf satellites and stretch the development and construction timeline to 28 months. In contrast, a standard platform with minor modifications would reduce the lead time to 12 months, moving up revenue generation by 16 months and saving at least $5.7 million in labor costs alone.
Phase C – Mass Production:
For the final phase, which involves the serial manufacturing of 80 satellites, there is no cost or timeline difference between the ready-made and custom-made options. That’s because this phase is purely about churning out the satellite model developed during Phase B. However, by going with a standard bus, Phase C could be reached two years sooner.
Looking at the entire process from Phases A through B, the standard platform provides considerable advantages in terms of cost-effectiveness, time savings, and Increased reliability of the initial satellites.
Additionally, it’s important to consider mission risk and satellite reliability. Any newly developed satellite requires hardware qualification or requalification on the ground and multiple test flights to root out potential issues. The standard product, in contrast, has already proven its reliability through previous launches.
Deciding whether to use a custom or standard satellite bus is based on more than what it will cost and how long it will take. Each company must consider its unique market position, long-term goals, and specific mission requirements. While cost savings and faster deployment are critical, companies must balance this against factors like competitive differentiation, payload-specific needs, and future scalability.
Outlook for standardizing satellite production
Undoubtedly, there will always be missions requiring a high level of customization, but overall, standardization is the only way to accelerate the industry. In the long term, no constellation will benefit from customization.
Choosing a modular satellite platform as an off-the-shelf vehicle and tailoring payloads to fit standard requirements will also likely become the new industry standard. Among the first to take this step are SpaceX with its Starshield offering and Kongsberg NanoAvionics. Other smallsat manufacturers will follow, considering that standardizing a platform, and unlocking its use, massively boosts innovation and opens further markets, as other industries have already shown.
The choices made by satellite and constellation operators today will undoubtedly shape the commercial space industry’s future and lay out the path for tomorrow’s pioneers.
Vytenis J. Buzas is a co-founder and CEO of Kongsberg NanoAvionics, a leading European small satellite bus manufacturer and mission integrator recently acquired by Kongsberg Defense and Aerospace. Prior to founding NanoAvionics, Vytenis was the leader of the first national satellite mission in Lithuania and worked as a researcher at Vilnius University and NASA Ames Research Center in Mountain View, California.
This article originally appeared in the August 2023 issue of SpaceNews magazine.
