*Globalstar Demand - and random orbits* Oncemoreagain, you asked:
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"...The market for satellite-based telephony is not at all large enough to justify the expense of building a system to provide such service. Globalstar's own IR contact once told me that it would not be wise for Globalstar holders to wish for Iridium to stumble, which I took to mean that it would indicate a lack of market acceptance of such services.
I ask again for anyone here to go beyond the science of the satellite business, and to address the real reason this board exists - to make money. Who are the users, how much time will they spend in satellite mode, and what is the demographic proof of the answers to these questions?"
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The users [over the next 10 years] will be everyone with ears. That currently is about 5 billion people depending on the price of the service. I'm sure you've heard of price elasticity. As the price gets cheaper, more people will buy and this is not a linear relationship meaning tht at a high price, few will buy, but there is a price at which suddenly there is a LOT of interest.
Initially, Globalstar can sell the minutes at 15c and make a good profit. At 15c and even with a cumbersome phone compared with terrestrial handsets now being sold, a LOT of people would buy one. Even at $1000 per handset. There are hundreds of millions of cellular customers now and they nearly all get annoyed at gaps in their service and they are paying MORE than 15c per minute [mostly].
So, Globalstar can sell most of the minutes and the handset could set to Globalstar preferentially and switch to terrestrial mode if no Globalstar signal is available [say inside a city, inside a concrete building where the signal needs to go in at a low angle through the windows].
Car manufacturers [many of them] will build Globalstar into cars, initially as an option, but after a few years, who would buy a car without Globalstar in it? I reckon the small cost would be worth it to nearly everyone.
So we already, with the first constellation [the second and third will be much, much cheaper] have a price competitive system. The only question remaining is how far we can raise prices without giving sticker shock to too many people. That is a very nice marketing position to be in.
When people talk about 'the market for satellite-based telephony' being a certain size, they always omit to say at what price. Which just goes to show how hopeless their market research is. They also don't report for what sort of handset, quality of call, voice delay etc.
The reason it was considered bad if Iridium stumbled is that it would show the acceptable price [assuming quality was okay] is WAY lower than people hoped. Globalstar would therefore expect reduced margins and would have to sell the minutes cheaper to get them used.
This has all been covered before, so it is not true to say the thread is all technical. All this is old stuff. The important stuff is the technical stuff. The market is now at the suck it and see stage.
How much time will they spend in satellite mode? All the time! They'll switch to terrestrial only if GSTRF is unavailable. That would be so much fun and would really stimulate demand and media interest. Free advertising by the terabyte! I'm in favour of a free or very very low startup price for Globalstar, then increasing it if demand for high priced handsets is hysterical. When 10% of the minutes are being used, the price could start rising and when 99.9% are being used, the last little bit could be sold at $100 per minute to a spot price customer whose yacht is sinking and $100 for a mayday call is not a worry.
Iridium is grinding their way down from an absurdly high price and they are doing it with almost no customers on the network after half a year. My bottom up marketing plan would see millions of customers in a short time! Both systems would be making no money, but guess which one would be in a position to start making it, in very, very, big heaps. [Those are Irwin Jacobs 'very, very's].
So there you go,
Marketing is a doddle. Globalstar is going to whup butt [I guess that's a phrase y'all would know].
Now, just how quickly will those photovoltaics degrade? And just how higgledy-piggledy can an orbit get. Mr A is certain that fuel is limited. Seems like random orbits would help [once there are hundreds of satellites up there] and with batteries and spot pricing, there would be no misuse of resources as all satellites would be fully used in random orbit mode - batteries would carry them through busy or quiet times [say the random orbits put too many in one place at one time or too few]. Mr A. could forget about really careful fuel management. Launch less fuel and more photovoltaics for the same launch weight.
Maurice
PS: I agree with Goodboy about Iridium, restructuring and equity ownership. Motorola is in the box seat. They made the money from design and construction, they will make the money from handset sales and they will buy the system from existing shareholders for nearer zero than the IPO price. ICO is a similar story. |
