Swarm Technologies won FCC approval to offer global internet-of-things communications services with a constellation of 150 miniature SpaceBee satellites. Credit: Swarm Technologies

Is the rapidly expanding market for connecting Internet of Things devices to satellites set for a shake-up as two billionaires, both with reputations for challenging the status quo, plot forays into the industry?

Elon Musk’s SpaceX, which helped transform a sluggish launch industry with lower costs and a focus on reusability, is quietly buying an operational satellite IoT constellation called Swarm Technologies.

After deploying most of its planned 150 hockey-puck-sized satellites in low Earth orbit (LEO), four-year-old Swarm currently operates the world’s largest dedicated IoT constellation. It provides low-cost, low-data rate services to tiny low-power modems on the ground called Tiles, which can help monitor a variety of applications when embedded in devices with sensors.

What Musk has in store for Swarm, however, remains a mystery. Swarm satellites operate on different spectrum than SpaceX’s high-data rate Starlink network in LEO, and their hardware is incompatible, noted boutique research firm Quilty Analytics.

Perhaps SpaceX is looking to use Swarm for its launch operations, Quilty Analytics mused in a recent quarterly update, or trips to Mars — or applications that involve the cars its sister company Tesla builds.

Meanwhile, the small launch vehicle developer backed by Richard Branson’s sprawling Virgin Group conglomerate has made a louder splash in satellite-based IoT.

Virgin Orbit said Aug. 23 it will spend a quarter of proceeds from merging with NextGen Acquisition Corp. II — a special-purpose acquisition company (SPAC) trading on Nasdaq — to set up a space solutions business over the next few years.

They expect their SPAC merger will put $418 million on Virgin Orbit’s balance sheet later this year, subject to shareholder redemptions.

A prolific entrepreneur, Branson’s empire spans from the Virgin Records music label to the Virgin Atlantic airline. His space tourism venture Virgin Galactic went public in 2019, kicking off a surge in SPAC deals across the industry.

Virgin Orbit has been developing an air-launch service that uses a modified Boeing 747 aircraft to send satellites to orbit with LauncherOne, a two-stage rocket.

Its space solutions unit, however, aims to develop a constellation of IoT and Earth observation satellites that will work together to serve the agriculture, aviation, maritime and pipeline-monitoring markets.

Finer details are still emerging but involve launching four satellites in early 2023, comprising two IoT and two imagery payloads, ahead of a “full constellation.”

According to an investor presentation, space solutions will reach $10 million in revenue in 2023, climbing to $436 million in 2026 to represent a fifth of Virgin Orbit’s total sales.

The presentation also highlighted several investments that Virgin Orbit has made in complementary constellations, including IoT startup Sky and Space Global (SAS), which recently restructured its business after running into financial issues.

Virgin Orbit has a reputation for investing in space ventures in return for launch agreements. SAS signed a three-year “launch services and consulting agreement” with Virgin Orbit in October 2020 for $1 million per year.

But despite its restructuring progress, SAS said Aug. 27 that it is calling time on attempts to keep its shares on the Australian Securities Exchange.

Instead, it plans to become a “public unlisted business” as it seeks to raise up to 25 million Australian dollars “in the coming months” for launching the first 48 of a planned 200 satellite constellation. It anticipates generating revenues from these initial satellites to manufacture and launch the rest of the network.

And so, the space industry waits in bated breath to see what Musk and Branson have up their sleeves.

For Iridium, Orbcomm and other legacy satellite IoT players, Quilty Analytics founder Chris Quilty believes they are fairly secure in their market position thanks to more than a decade’s worth of investments in hardware, partnership networks, and customer application software.

“While Musk and Branson could undoubtedly raise awareness of [the] satellite IoT sector, it isn’t readily apparent to us what they bring to the table that is new or differentiated,” Quilty told SpaceNews.

This article originally appeared in the September 2021 issue of SpaceNews magazine.

Jason Rainbow writes about satellite telecom, space finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information...