Amazon [AMZN] is once again looking to blast past its opposition, but this time it’s targeting the satellite internet industry.
The Washington-based multinational penned potentially the single largest rocket deal in the history of the commercial space industry yesterday.
This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.
Can Amazon win the satellite internet race?
The big tech firm signed deals with United Launch Alliance, Arianespace and Jeff Bezos’ Blue Origin for 38, 18 and 15 launches, respectively. Each launch will see between 35 and 61 satellites delivered into low orbit as Amazon looks to expedite Project Kuiper — its overarching strategy to deliver high-speed internet through a network of over 3,000 orbiting satellites.
No terms have been announced thus far, with information difficult to come by in relation to costs. However, previous figures from each company have each individual launch costing anywhere between $68m and $112m — it’s a good thing Amazon had planned to invest $10bn into the project.
This deal will put Amazon in direct competition with the current leader in the industry, Elon Musk’s SpaceX and its Starlink network. With 2,000 satellites already launched and over 250,000 subscribers already, Amazon has some significant ground to make up if it’s going to compete with SpaceX.
The firm is hoping that its global logistics and operations footprint, along with its ability to provide low-cost consumer technology devices will enable it to undercut SpaceX’s prices. Dave Limp, Amazon’s senior vice president of devices and services, stated that “we were able to get the cost of that well under $500,” when speaking about the satellite antenna customers will receive.
SpaceX currently charges $599 for its terminal, absorbing almost half the actual cost of $1,300 just to acquire subscribers. In an industry poised for phenomenal growth, every user counts. If Amazon can match service levels, and offer its typical hyper-competitive pricing, this could be its next great venture.
MyWallSt gives you access to over 100 stock picks, as well as providing free analysis, multiple podcasts, customised market updates straight to your phone, and much more. Sign up for free toda
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.