Amazon has announced one of the largest deals in the history of the commercial space industry, but how should investors react to this news?
Amazon (NASDAQ: AMZN) is once again looking to blast past its opposition, but this time it’s targeting the satellite internet industry.
The Washington-based multinational penned potentially the single largest rocket deal in the history of the commercial space industry yesterday.
Can Amazon win the satellite internet race?
The Big Tech firm signed deals with United Launch Alliance, Arianespace, and Jeff Bezos’ Blue Origin for 38, 18, and 15 launches respectively. Each launch will see between 35 and 61 satellites delivered into low orbit as Amazon looks to expedite Project Kuiper — its overarching strategy to deliver high-speed internet through a network of over 3,000 orbiting satellites.
No terms have been announced thus far, with information difficult to come by in relation to costs. However, previous figures from each company have each individual launch costing anywhere between $68 million and $112 million — it’s a good thing Amazon had planned to invest $10 billion into the project.
This deal will put Amazon in direct competition with the current leader in the industry, Elon Musk’s SpaceX and its Starlink network. With 2,000 satellites already launched, and over 250,000 subscribers already, Amazon has some significant ground to make up.
The firm is hoping that its global logistics and operations footprint, along with its ability to provide low-cost consumer technology devices will enable it to undercut SpaceX’s prices. Dave Limp, Amazon’s Senior Vice President of Devices and Services, stated that “we were able to get the cost of that well under $500,” when speaking about the satellite antenna customers will receive.
SpaceX currently charges $599 for its terminal, absorbing almost half the actual cost of $1,300 just to acquire subscribers. In an industry poised for phenomenal growth, every user counts. If Amazon can match service levels, and offer its typical hyper-competitive pricing, this could be its next great venture.