OpEd: The Sweet Spot of Opportunity

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  Space News Business

OpEd: The Sweet Spot of Opportunity

By EDWARD D. HOROWITZ

posted: 24 July 2006
01:38 pm ET


W hen interviewed recently on NBC about his new book, Revolutionary Wealth, futurist Alvin Toffler of Future Shock fame was asked what he thought the biggest surprise would be in the next 100 years. Here was his answer:

“I can tell you this: in 1,000
years people will look back on our time as the one that moved wealth-making off the Earth and put it into the sky — and it started a new wealth revolution.”

He also mentioned the Surrey Satellite Technology Institute in the United Kingdom because they strongly believe that, within a decade, they will launch a nano-satellite the size of a credit card.

The next thing you know, nano-satellites will be able to create new nano-satellites — in space — and today’s concept of launching will become a memory of the old days.

During the very same decade that nano-satellites are in development, projections are that in the existing satcom business alone revenues driven by direct-to-home applications will soar five-fold, to $6 billion from $1 billion in 2003. It’s not about one decade or two when you have a thousand-year perspective. But no matter how you slice it, our growth rate is too great to ignore.

This year, for the first time, sales of high-definition television sets will outnumber conventional TV sales and this will give satellites a huge, but temporary, advantage in the media transportation world.

New firms with new ideas and new technologies will figure out new ways to compete for our business and for new business not yet in place. They will work to circumvent the massive capital costs that have always been a protective and steep barrier to entry in our business.

The new competitors gathering around us will not challenge us by trying to copy our business model but rather by redesigning the business altogether. It will be — forgive the term — astronomically cheaper, and if we aren’t investing in research and development of new technologies, even as we grow and maintain our fleets, we will become the dinosaurs of the business and our proprietary magic will be gone.

That’s the way it is in a globally competitive world. In addition to the existing field of competition, 50 governments report having space programs and there are hundreds of new, smaller companies lining up to take us all on.

Today, the satellite communications business sits in a sweet spot of opportunity, somewhere between the extremes of overconfidence and over-shooting.

We have to re invent satellite communications.

How do we re invent a technology that was born mature? Satellite communications is what it is, and always has been. It remains the most efficient, secure and ubiquitous system for delivering images, data, video and voice anywhere in the world at any time to any designated user.

But its reliable proficiency is exactly the greatest potential source for overconfidence. The universal effectiveness of satellite communication is a seductive invitation to laurel resting. The re invention must come from the way we see our business.

Today, we are in the secure transportation business. Tomorrow, we must be in the imagination business as well, because other competitive technologies, like those enabled by nano-technology, are inevitable.

Maybe these ideas are growing today in the minds of engineers in your company, or engineering graduate students in Beijing, Bangalore or Boston. They are certainly brewing in the research and planning of new competitors.

When the satellite business exploded, it happened in a culture fired by the excitement of the Space Age. Where is that excitement today? In March 2001, the Hart-Rudman Commission argued that in the United States after terrorism “the second-greatest threat to American national security is the failure of science and math education.” The bi partisan commission unanimously agreed that “the failure of science and math education is a far greater threat than any conceivable conventional war in the next quarter of a century.”

While that failure is a wake-up call for American security in general, it is also a specific warning to us. Where will the talent come from? The Space Age engendered inspiration and motivation, and it spawned a brain explosion in science and engineering. Today, the bulk of that excited and productive generation of space scientists is, well, my age. We are hitting a demographic wall, especially in the United States; and while today’s 50 is yesterday’s 40, it’s not 25. We have an ever-smaller bench waiting to play.

Even Arthur C. Clarke did not imagine Google. And while we are not in direct competition with the likes of Google, we are in direct competition with Google, and every other business, for talent and the excitement that draws it. Sustaining technologies are not magnets for innovative minds, and rather than trying to change their perception of us, we must first invest in changing our self-perception.

One of our greatest commercial challenges is that we live in the Internet Age now, and not the Space Age. In the Internet Age, mass media is giving way to highly personalized, niche media. Commercially speaking, we are a mass media conveyance in a time of personal media expectations.

In the United States, we must realize that the battle for talent is global and that our economic history is proudly filled with immigrants to this country — including my own family — who came because it was their best chance.

Today, best chances are global, and immigrant talent is being simultaneously less welcomed in the United States because of fear in a post-9/11 America. These fears must be overcome in order to welcome and inspire the international talent pipeline again.

Frankly, keeping talent out does more damage to our long-term security than a more welcoming policy for the best and brightest we can attract. Immigration laws must be constructed to allow the brightest students, teachers, engineers and scientists ready access to this country. We need them, and we always have.

While there is overconfidence in laurel resting, the other extreme — overshooting — is no less a concern. Whatever we do, it must be driven not just by our imagination but also by our customers’ needs and wants. It’s an arrogant waste of time and money to make products no one needs or wants just because we can.

I stipulate, in agreement with Growth Theory economist Paul Romer of Stanford, that “growth occurs whenever people take resources and re arrange them in ways that are more valuable.”

“Valuable” is the key word.

I further stipulate that our goal should not be the incremental “more valuable,” but the geometric “most valuable,” thus refusing to rely solely on arithmetic “re-arrangement.”

And here we are today, again asking the obvious question: Now what? Satellite communications continues to be the most reliable, secure, efficient and ubiquitous system for delivering information, images, video and voice anywhere in the world — anytime.

Arthur C. Clarke’s vision was so amazingly prescient that he conceived a fully realized technology, which remains, in its essence, complete today, in unique defiance of Moore’s Law and the whimsical novelties of combination, which define commercial genius and drive technological growth.

Surely, satellite communication can be incrementally improved. But the growth in our industry will come from enriching the existing satellite food chain with bold new products, services and ideas. Products that will weave satellite services into our day-to-day culture everywhere in the world.

I certainly do not have all the answers — far from it. But I am incredibly excited about being part of discovering them.

Edward D. Horowitz is president and chief executive officer of SES Americom. The commentary is adapted from remarks he gave June 14 at the International Satellite Communications exhibition in San Diego.