Market Opportunities Above and Below the Cloud
Leon Yen is NewSpace Global's Chief Information Officer and a first-time contributor to Thruster.
When true paradigm shifts occur, as with Cloud Computing and NewSpace, there is no buzz phrase that is more appropriate, stigmatized as it may be. When examining existing and emerging NewSpace Market opportunities, the 2nd of the "NSG 4-Screens," the ever-recurring interplay of the two innovation economies is clear – companies are using Cloud Computing to build and power their ventures, creating products and services to solve real-world problems. Recent developments in the drive to bring launch and payload costs down will usher in an era of computing above and beyond the Cloud – embryonic at this juncture, but poised to open up a new realm of market opportunities for NewSpace ventures throughout the "8-Verticals of NewSpace."
Consider the successful test of NSG 100 SpaceX's Grasshopper vertical take-off vertical landing rocket (VTVL) in November. As the technology develops and matures over time, the resulting decrease in launch and payload costs (facilitated in-large part by lower R&D expenditures through Cloud Computing and Big Data Technologies) will lead to more companies such as Cosmogia and Mountain View, CA's SkyBox Imaging to launch industry and market-specific computing payloads into orbit. (Please see "SmallCap Review" in the April 2012 issue of Thruster.) Cheaper access to space means more Internet infrastructure and services above and beyond the cloud, and as computing moves into space, we can expect the continual creation of innovative products and services that address existing terrestrial market opportunities, such as Earth Observation (EO), geographic information systems (GIS)/mapping/remote-sensing, and real-time satellite communications, to name a few. The massive amounts of data created by these applications can then in turn be processed by Cloud Computing and Big Data technologies, making the resulting datasets useful for industries such as insurance, engineering, and finance.
But what about the proverbial pipe? Today's Internet technologies such as Cloud Computing are by nature bandwidth-intensive. To transition from a terrestrial to a space-based infrastructure technology, point-to-point connections and data throughput must be continually developed and improved. NSG PTC Cisco with its Internet Router in Space (IRIS) promises to address this challenge. (Please see "Publicly Traded Companies" in the October 2012 issue of Thruster.) Launched into space as a hosted payload on Loral's Intelsat 14 with satellite operator Intelsat, the SEAKR Engineering-developed IRIS router and modem allows IP traffic to be routed on board, enabling Web, Voiceover Internet Protocol (VoIP) and other Internet-based services to directly communicate over satellite. By eliminating the required "double-hop" of data to and from a terrestrial-based intermediary, IRIS and similar in-space IP routing technologies may bring about latency reduction, a decrease in satellite transponder costs, and increased throughput – all critical for real-time applications such as video conferencing and real-time IP-based communications. Companies such as O3b Networks, whose goal is to "deploy a next-generation satellite network that combines the reach of satellite with the speed of fiber," may eventually rely on technologies such as IRIS to deliver these services. And with INTL's potential IPO in November, we can expect investment in satellites to translate to inexpensive and widespread installations for future IRIS and competing space router deployments.
Inexpensive, in-space cloud and internet infrastructures may ultimately lead to products and services that address market demands and needs that may not be mission-critical, but have large commercial value and the potential for widespread adoption. NanoSatisfi, a space data company housed within San Francisco-based NewSpace hardware incubator Lemnos Labs, provides affordable and convenient access to space through nanosatellite infrastructure and user-definable data collection capabilities. NSAT's cubesat solution may allow entrepreneurs to cost-effectively rent time on the spacecraft, giving them the opportunity to develop new space-based applications for engineering, entertainment, finance, and security. After raising $100,000 on Kickstarter, they've subsequently raised nearly $1Mln in angel financing to fund their next phase of business. In addition, parent incubator Lemnos Labs also announced on November 16th the securing of a $1.85Mln funding round – further validation from the financial sector that market opportunities exist and are deemed fundable.
The future widespread installation of computing and Internet technologies in space will spawn opportunities of their own. As they start to move "above the cloud," servicing the underlying space-based Internet hardware and software infrastructures will create another set of market opportunities – namely, IT-related In-Space Services, the 6th of the "8-Verticals of NewSpace," and maintenance of space-based cloud servers and networks. Manufacturing the infrastructure in space cost-effectively is one matter – service and upkeep is another. Companies such as ATK-backed NSG 100 Vivisat and its satellite extender technology may offer in-space refueling and maintenance services to satellites and in-orbit computing hardware such as IRIS, effectively extending the space router's operation and underlying satellite's life by several years. Moreover, NSG 100 SmallCaps like Altius Space Systems may too support such efforts. (Please see "Leaders of NewSpace" in this month's issue of Thruster.) Such advances in on-orbit servicing directly translate to space-computing infrastructure resources that are stable, maintainable, and ultimately provide a quality-of-service level equal or superior to terrestrial Internet.
Indeed, the months and years ahead look promising for commercial computing in space, as developments move forward by leaps and bounds. But we need not look to the future to see the benefits of these two paradigm-shifting innovations. As it stands today, terrestrial-based Cloud Computing and Big Data has leveled the playing field for NewSpace startups developing sophisticated technologies at a fraction of the cost of what it would have been just a few years ago. The few Internet companies that made it out of the "dot-bomb" era and flourished allowed their founders to form the more successful NewSpace companies. These founders and former Internet pioneers truly understand the value proposition of the Cloud, and are harnessing the promise of infinitely scalable computing resources to build their launch vehicles. SpaceX, through Cloud Computing, runs their R&D and flight operations at a fraction of the cost, resources, and people that NASA requires, thereby driving costs down and enabling them to continue as a viable, revenue-generating company. (Please see "Above the Cloud" in the March 2012 issue of Thruster.) With the success of Amazon, Jeff Bezos doubled-down on the two paradigm shifters in tandem: NSG 100-ranked Blue Origin and AMZN's industry-dominant Cloud Computing service, EC2. Cloud Computing and NewSpace is a natural pairing – they create mutually beneficial business ecosystems that support and promote scalability, efficient reuse, and lower total cost of ownership. It's no coincidence that forward-thinking NewSpace entrepreneurs know this and are taking pages from the playbooks of their respective Internet successes. They've applied the lessons learned to their NewSpace ventures – embracing scalability, reuse, redundancy, agile teams, and ultimately, creative and forward-thinking management, the 1st of the "NSG 4-Screens," with the ostensible end goal of making space access ubiquitous, commercially affordable, and operationally sustainable. (Please see "LargeCap Review" in the November 2012 issue of Thruster.)
The transformative and disruptive quality of Cloud Computing lies in its fundamental value proposition – providing vast computing and data processing power at unprecedented lower costs to everyone, supercomputing for the masses and democratization of IT, if you will. Cloud Computing is already widely used in LargeCap and SmallCap NewSpace companies alike, both on an IT/operational level, in R&D, and embedded within the supply chain of NewSpace hardware, software, and end-user services. Its pervasiveness is especially visible in the first three of the "8-Verticals of NewSpace," Spacecraft, Launch Vehicle Providers, and Spaceflight. The need for large-scale computing in bringing hardware and software to market has driven spacecraft manufacturers such as NSG LargeCap BLUE to use Cloud Computing and Big Data technologies to process and analyze large datasets for research. Using Cloud/Big Data technologies such as Hadoop and MongoDB, BLUE is able to cost-effectively build applications for authoring and visualizing complex systems automation in support of space launch vehicle development. Satellite service provider ViaSat is using Hadoop and Amazon.com EC2 to process terabytes of usage data on a daily basis, in support of its Exede satellite broadband service. And in designing its launch vehicles, SET employed Siemen's Cloud-Based NX/TeamCenter to centralize its R&D and managed product development environment.
But what may be far more interesting to Thruster readers is that Cloud Computing and Big Data are integrated into NewSpace product and service offerings themselves. For instance, Planetary Resources, a NSG 100 operating in the Space Resources Vertical, has stated that its Arykd 300 spacecraft will take advantage of Cloud Computing, among other information technologies. (Please see "LargeCap Review" in the May 2012 issue of Thruster.) And while there's no doubt that the benefits of the Cloud will continue to power innovation in emerging or potential NewSpace markets, existing commercial and business demands in satellite, EO, GIS, and remote-sensing drive the lion's share of NewSpace forays into the Cloud. SKYB, in partnership with DERA (both NSG 100s) will run its proposed satellite constellation using Hadoop and AMZN EC2. (Please see "Above the Cloud" in the March 2012 issue of Thruster.) Similarly, Google (in its Google Earth and Google Maps offerings) utilizes Earth imaging provided by GeoEye satellites, and processes the data with its own MapReduce big data management solution, hosted on its AppEngine Platform-as-a-Service. The promise of horizontal scalability and virtually unlimited computing power has leveled the R&D and product development playing field for established and fledgling NewSpace companies.
NewSpace enterprises are also leveraging the Cloud in other areas outside of R&D and product development. At Dreamforce 2012, Salesforce's Annual Conference, Richard Branson of Virgin Galactic was in attendance to support and validate Cloud Computing and its prominence in the future of business computing. Indeed, VG itself has used the company's platform for enterprise customer relationship management (CRM) (including Salesforce's Sales Cloud 2) to manage the direct sales process for its "Astronaut Relations" program. Similarly, Equipois uses Salesforce.com for its customer relationship management application, as well as Central Desktop, a Cloud-based tool for project management and collaboration. While use of the Cloud for CRM hardly justifies a deep NewSpace connection, with NSG 100s like VG and POIS gaining more confidence in the Cloud it is more probable that over time further technological synergies will emerge.
NSG Analysts expect to see more products and services arising out of the marriage between Cloud Computing and the NewSpace industry in years (or even months) to come. As with any paradigm shift, change is inevitable. And just as the companies on the NSG 100, NSG PTC, and NSG OTB are radically changing the ways in which we view, access, and profit from space, Cloud Computing is radically changing the way in which NewSpace companies, large and small, build their products and manage their information and businesses resources. And as "Above the Cloud" infrastructures evolve and mature, we will no doubt see the emergence of in-space data processing and the evolution of cloud services existing literally above the clouds, providing new market opportunities for companies to create viable and profitable businesses in NewSpace.
Leon Yen is NewSpace Global's Chief Information Officer and a first-time contributor to Thruster.