Iridium Focused on Strengthening Competitive Advantage in Select Satellite Segments, CEO Says
Iridium remains optimistic it has a strong future in areas of the satellite industry where it already holds a competitive advantage, particularly as it prepares to launch its Iridium NEXT system, said CEO Matt Desch Tuesday. Iridium plans to launch 81 satellites over the next few years to accommodate the NEXT constellation, with the first two deploying next summer, Desch said during a Washington Space Business Roundtable event. All 81 satellites should be in orbit and operational by the second half of 2017, he said. Iridium has said the NEXT satellites will provide significantly more capacity than the company’s current satellite constellation and will allow more efficient spectrum use (see 1412020050).
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The extra capacity of the NEXT satellites will allow Iridium to continue growing its data business, Desch said. Satellite phone service still comprises more than 50 percent of Iridium’s business and is an area where Iridium holds a competitive advantage it plans to continue to protect, “but what people really want is data,” Desch said. Data is Iridium’s fastest-growing business segment, with products like its GO Wi-Fi services and devices expected to become the company’s best-selling line over the long term, he said.
Iridium believes the Internet of Things (IoT) will be a “big opportunity” in the near future, as evidenced by the 43 percent year-over-year increase in the number of subscribed devices on Iridium’s network that the company reported at the end of Q3, Desch said. Iridium will continue to work with the wireless industry within the IoT space because satellite and wireless are complementary segments for machine-to-machine communications, Desch said. “Once it gets beyond the 10 percent of the world where [wireless] works, it comes to us,” he said.
Iridium doesn’t plan to expand into the consumer market, particularly in the aviation and maritime markets in which the company already holds a competitive advantage for lower-bandwidth safety communications, Desch said. “We play in the cockpit of aircraft because we’re almost guaranteed to work, even around the poles,” he said. In the maritime space, “the crew not only calls to our system but also gets an Internet connection.” The Iridium NEXT satellites eventually will be able to provide up to a 1.4 Mbps connection with maritime customers, “but that’s going to pale in comparison” with the Ku and Ka bands needed for consumer Wi-Fi, he said. “Our focus in those two markets is on the competitive advantage we have in safety services.”
Iridium’s products “are tiny enough to fit into small devices” targeted at consumers, “but there’s a difference between being a consumer space and being a consumer company,” Desch said. Being a consumer-oriented company requires spending large amounts of money on branding and distribution, which doesn’t make sense for Iridium, he said. “We’d have to brand a stadium,” Desch said. “We’ll let Intelsat do that first.”
Iridium also plans to hold onto the public safety spectrum it has rather than sell portions of it, Desch said. “Spectrum is a temptress to some in this industry,” he said. “I have people coming by every year telling me ‘Would I be interested in selling it for something else if we could just figure out how to make it be the device to send Netflix and back and forth for their kids?’ And I say we’re in this business and believe in it.”