Iridium: The Brick is Back
Deborah Asbrand
March 29, 2001
You still won't find weighty cell phones ringing atop bistro tables and beside plates of arugula. The difference is that this time around, Iridium says that's how it wants it. The revived company is officially outing itself at a conference today. But pundits' early reviews wonder whether this fixer-upper of a company is worth the trouble.
Then again, Iridium has always marched to a different drummer. Back in 1999, when folks still believed in the new economy, Iridium went bankrupt. Its strategy for satellite telephone service included clunky handsets that never scored with the flip-phone-and-mochaccino set. Investors had spent $5 billion to get the satellites up, and last December new investors bought the company's assets for $25 million. No wonder the new corporate incarnation, called Iridium Satellite, is feeling jazzed. "I'm sure the next few years probably look fantastic for Iridium Satellite, but that's because they practically got the system for free," satellite consultant Jeff Abramson told the Financial Times.
Reporters noted that the old Iridium's calling rates of $7 per minute and handsets that cost up to $3,500 didn't inspire casual yakking. Now Iridium says it has found its niche: remote workers on oil rigs and in mines, and, of course, the Department of Defense. Iridium will also offer data and messaging services in addition to voice. And according to outlets, Iridium expects that the wireless carriers it has partnered with will charge a more reasonable $1.50 per minute for calls.
To reporters, the good news ended there. The New York Times pointed out that Iridium's data services will chug along at speeds about one-fifth of a home PC dial-up. The Financial Times tsk-tsked that Iridium's niche customer base could be too narrow. Let's hope the new owners aren't planning a public offering, the Associated Press wrote by way of a quote from Frost & Sullivan analyst Jose del Rosario, who said that with no plans to enter the public financial markets anytime soon, Iridium's "pressures will be internal for the time being."
That is, at least for the next seven years. That's when the fleet of 60-plus satellites will be due for replacement, the peach paper reported. New satellites are big-ticket items, and original investor Motorola designed the existing set. Will Iridium be able to afford the renovations, given its new niche as a specialty gig? Not likely, consultant Abramson told the Times. "Even if the satellites last another nine years," Iridium is "just kicking the can down the road."
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