Tech-savvy entrepreneurs devote bucks and brainpower to space visions, changing conceptions of the future for everyone except devotees of Robert A. Heinlein. Click here for the Forbes story on the men who are taking us all to space pretty darn quick.



New Space Race Gets Down to Business

by David M. Ewalt and Leah Hoffmann

January 29, 2006

On July 20, 1969, Neil Armstrong stepped out of a cramped metal spacecraft and onto the moon, creating one of the iconic moments in human history. On Earth, the achievement was broadcast live to billions.

Around the same time, in four obscure laboratories in California and Utah, a much quieter revolution was underway. Researchers commissioned by the U.S. Department of Defense were connecting a handful of computers into the first packet-switched network, which they called the ARPANET, giving birth to a computing system that would lead to the global Internet.

Four decades later, the Internet has changed the way we do business and live our lives, but space still remains inaccessible — the domain of governments and the ultra-rich. There has been little money to be made in space by anyone but huge contractors, such as Lockheed Martin or Boeing, less excitement and no hope of the average Joe getting involved.

But the tide is turning. Flush with dot-com cash — and raised on visions of moonwalks, space shuttles and Captain Kirk — a generation of passionate, tech-savvy entrepreneurs is breathing new life into the space business. Iconoclasts like Virgin Group founder Richard Branson, CEO Jeff Bezos and Google co-founder Larry Page are dedicating not only their dollars but their brainpower.

“All the sudden, you have these new visions for space exploration, and there’s renewed excitement,” says Marco Caceres, senior analyst and director of space studies for aerospace consultancy The Teal Group.

Stagnant aerospace market
A little new blood is just what the doctor ordered. At its core, the modern space industry is all about building and launching satellites, and that business has been lagging — largely due to the extensive infrastructure already in orbit. In 2005, the industry had one of the lowest launch rates in its history. Sales in the U.S. space sector increased 3.8 percent, or $1.4 billion, to a record $37 billion in 2005, according to the Aerospace Industries Association. But spending by NASA and other federal agencies accounted for the entirety of that increase — and it lagged far behind the 9.2 percent annual growth for the aerospace industry as a whole. Projections for next year are flat.

“For the past five years, the market has been stagnant,” says Caceres. “Everybody has been looking around and saying, is this what the industry is becoming? Or is it just part of a cycle, a temporary lull before a boom?”

If there is a boom coming, the fuse was lit by the 2004 flight of SpaceShipOne, a reusable space vehicle built by aircraft designer Burt Rutan and funded by Microsoft co-founder Paul Allen. (Microsoft is a partner in the joint venture.) By flying into space twice within two weeks, it won the $10 million Ansari X Prize and proved that small, privately funded efforts could go a long way toward revolutionizing space travel.

The ultimate promise of reusable craft like SpaceShipOne is a vastly reduced launch cost, greater ease of preparing a flight and the prospect of opening space for tourism.

A 1997 NASA study calculated that about one-third of Americans would be interested in traveling to outer space, and a few entrepreneurs already are making it happen: Arlington, Va.,-based Space Adventures has organized three trips into orbit for wealthy private citizens — charging $20 million for a ride on a Soyuz spacecraft and a few days on the international space station.

More accessible alternatives
Of course, a handful of wealthy adventurers do not make a market — and even those involved agree that space tourism isn’t ready for the mainstream. “For the time being, it’s going to be something that’s very expensive,” admits Space Adventures Chief Executive Eric Anderson.

So more accessible alternatives are in the works. Richard Branson’s Virgin Galactic hopes to take paying passengers on three-hour suborbital flights by early 2009. Branson hopes to reduce the cost of suborbital travel by commercializing technology created by Paul Allen’s Mojave Aerospace Ventures; the company is now building SpaceShipTwo for Virgin’s purposes.

Late last year, Virgin cut a deal with the state of New Mexico to build a $200 million spaceport. One hundred and fifty founding investors have put down deposits on their $200,000 tickets.

Another effort to create cheaper launch vehicles comes from Elon Musk, the founder of PayPal, who made $1.5 billion when he sold the business to eBay. His company, Space Exploration Technologies (or “SpaceX”), is developing a rocket called Falcon 1. When completed, it should put a half-ton payload into low earth orbit for just $6.7 million — a pittance compared to the $150 million you might spend launching a Boeing Delta 4 or Lockheed Martin Atlas 5 rocket.

Boeing and Lockheed aren’t taking the threat lying down. Last May, they announced a plan to merge their space-launch operations into a new venture, the United Launch Alliance, and the Federal Trade Commission is expected to approve the deal sometime this month.

In December, SpaceX scrubbed the rocket’s maiden launch only 15 minutes before blastoff. But another attempt is scheduled for Feb. 8. “All eyes are on Elon,” says George Whitesides, executive director of the National Space Society, an advocacy group. “A successful flight would be a critical milestone.”

Tech savants in the race
Plenty of other tech savants are also turning their attention to spacecraft manufacturing. co-founder and CEO Jeff Bezos is bankrolling Blue Origin, which aims to design and build small sub-orbital vehicles. Legendary videogame designer John Carmack — creator of games like Doom and Quake, and founder of id Software — owns rocket-technology startup Armadillo Aerospace. And Google co-founder Larry Page has joined the board of the X Prize Foundation, which is now planning a series of new contests to encourage research and development.

Of course, even if both entrepreneurs and aerospace giants produce revolutionary new space vehicles, there’s still nowhere for them to go. Pleasure flights would last just a few hours and don’t hold much promise for repeat business. But what if space contained a destination that could justify the expense and attract visitors for days or weeks?

That’s the question being addressed by Robert Bigelow, owner of the Budget Suites of America hotel chain. His venture, Bigelow Aerospace, is using technology originally developed by NASA to develop inflatable habitats, each one of which could be shipped into space, blown up to about the size of a three-bedroom house and connected to a structure such as the international space station.

“I think Bigelow could be the sleeper success of space tourism,” says Whitesides. “He’s recognized that a key component of space tourism ultimately will be the destination, and that’s something that really no one else at his level has thought about.”

Rockets for couch potatoes
Don’t feel up to making the trip yourself? No worries: You’ll be able to get a taste of the excitement without leaving your couch. The Rocket Racing League plans to pair off high-powered rocket planes in a high-speed, 3-D chase through the skies — think NASCAR meets “Star Wars.” The effort, which is being put together by Peter Diamandis, chairman and CEO of the X Prize Foundation, and Granger Whitelaw, a venture capitalist and partner in two winning Indianapolis 500 racing teams, is currently developing rocket-powered aircraft with Mojave, Calif.,-based XCOR Aerospace. They plan to demo the first rocket races this October at the X Prize Cup in Las Cruces, N.M. (see “Rocket Racing League” video).

Of course, there’s no evidence any of these entrepreneurs will be able to make their dreams a reality. The space industry of 2006 is like a rocket about to launch on its maiden voyage — nobody knows whether it will take off or just blow up on the pad. Space tourism in particular has lots of critics. “The reality is that space tourism is just not cost-effective right now — it’s a limited market, and it’s fraught with risk,” says aerospace-industry analyst Howard Rubel of Jefferies and Co.

But if nothing else, these new efforts show signs of life and excitement in the space business — something sorely missing since the summer of 1969.

“The exciting thing about this moment is that you not only have the promise of new markets, you have credible players putting significant capital into them,” says Whitesides. “That’s a real sign of development in the world of space.”