Commercial Satellite Construction’s Slump is Status Quo
The proliferation of larger, more-capable satellites has caused a lull in the number of new commercial spacecraft being built, and companies must turn to mergers and specialization for survival, Frost & Sullivan analyst Max Engel said Thurs.
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Requests for satellites haven’t risen as much as the demand for satellite services. The number of satellites launched has fallen considerably since the “go-go years of late 1990s,” Engel said. There were 14 new satellites in 2004, 28 in 2000 and 27 in 1997. The average 1997-2000 was 24 birds annually, for 97 total. There have been only 61 launches have occurred 2001-2004, for an average of 15 per year. Engel’s analysis suggests the average of 14 or 15 launches a year will remain the new reality for awhile.
Size matters as well, Engel said. Of the satellites launched since 2001, 60% have been large spacecraft, while medium-sized birds made up about 1/4 of launches and small satellites accounted for 13%, he said. As the industry moves toward larger satellites, fewer orders are placed and demand for each individual satellite remains relatively stable. While “demand for satellite communication services is growing constantly… it’s not growing fast enough,” he said.
Engel and fellow analysts see fleet replacement as a major driver of satellite manufacturing in the near future. But due to advancements in technology, replenishing capacity doesn’t necessarily mean replacing satellites one for one. For example, Astra 1 KR is scheduled to replace Astra 1B and 1C in the fall. Engel also noted that 1982-2002, satellite capacity has grown 11-fold. “Without a major killer app or some sort of great increase in demand for a current service, we're not going to see a great increase in the number of satellites ordered,” he said: “If trends are sufficiently poor, we may actually see a decrease in the number of satellites ordered.”
Companies can marry operations -- like Alcatel and Finmeccanica (CD Jan 31 p13) -- or follow in the footsteps of Boeing, Locked Martin and EADS Astrium in closely linking the “commercial side of the house” with the “military and national security sides of the house.” Another answer may be catering to particular customers, he said. Boeing wants to be seen as more of a systems integrator, Orbital Sciences is zeroing in on the smaller satellites and Alcatel and Space Systems/Loral are projecting a “very commercial friendly focus.”
From this point on, commercial satellite construction can only hope for a boost from the increase in HDTV offerings and the emergent satellite broadband market, Engel said. HDTV’s growth will demand considerable new capacity, and so too will satellite broadband when it becomes a significant player. So far, satellite broadband has a reputation as “the greatest thing that didn’t happen,” Engel said. Providers like iPStar and WildBlue promise their day is near but consistent setbacks have ushered in a chastened, wait-and-see attitude in the sector. If satellite broadband is the catalyst to kick- start manufacturing, the industry won’t see any major benefit for at least a couple of years, Engel said: “It really is the case of is the glass half full or is the glass half empty?”