by Rod D. Martin
May 13, 2015
In the last few years, Elon Musk’s SpaceX went from being derided as a “risky venture,” “doomed to fail,” to a multibillion dollar business with extremely profitable contracts in both the private and public sectors.
Elon’s the most famous. But Elon’s not alone.
CNBC’s Clay Dillow wrote yesterday on SpaceX’s competitive prospects going forward.
Last week’s crew capsule test marks the latest in a string of successes for SpaceX over the past half decade. In 2010, many legacy aerospace companies working in the launch space viewed SpaceX (the No. 2 2015 CNBC Disruptor) as an unrealistic upstart that didn’t appreciate the harsh technical and cost realities of the spaceflight business.
In the years since, SpaceX has simply redefined those realities. It has brought modern design and cutting-edge manufacturing into everything it does, leveraging technologies like 3-D printing to trim cost and weight from its rocket components. Its supply chain is completely vertically integrated, allowing the company an incredible amount of control over its own costs. And it has put low cost—rather than high profit—at the heart of its business model.
All that has allowed SpaceX to offer reliable launch services at prices 20 percent to 30 percent lower than its competitors and grab significant chunks of the $2 billion civil and commercial launch markets. (It is expected to gain clearance to compete for U.S. military launch contracts in June). It now has roughly 40 missions in its multiyear launch manifest. These successes have helped Musk build a company valued at $12 billion, with more than 3,000 employees.
All of this market disruption has forced SpaceX’s competitors – including giant competitors such as Boeing and Lockheed-Martin – to adjust accordingly and prepare to take on SpaceX in its quest for market share.
“Every single major launch company in the world has responded in one way or another to what SpaceX is doing,” said Carissa Christensen, managing partner of defense and space consultancy Tauri Group. “SpaceX has created real competitive pressures for these companies, and they are responding with investment, with more of a focus on price and on delivering value.”
Just last month, United Launch Alliance—the Boeing-Lockheed Martin joint venture that currently owns a monopoly on U.S. military space launches—unveiled a new heavy-lift commercial rocket called Vulcan, slated for maiden launch in 2019. Not only is the rocket designed around American-built rocket engines (from Aerojet Rocketdyne and Jeff Bezos’ Blue Origin) rather than Russian-made power plants, but ULA is promising that part of the spacecraft will be reusable in keeping with the new launch paradigm being pursued by SpaceX.
Given the tremendous order backlog SpaceX enjoys, no one is seriously threatening its business in the short term. But Elon isn’t just building a company: he’s building a whole industry, full of promise and brimming with vision and never-say-die. In time those competitors will be a big deal for SpaceX.
But far bigger still is the future they’re collectively creating.