THREAD: Can we address the issues of capacity and market once again? I realize this has been gone over, but I'm still seeing differences, both here and elsewhere.
On market size, for instance, I see numbers like "1-2% of household income", but that seems arbitrary to me. The market will depend on much more than income. Remember, the phone will be heavier and less convenient to use than the Q phones. The normal commuter won't want to carry it around unless there is a real need. The target market would seem to be only those who go out of cellular range with any frequency, and who have enough money to buy it.
The potential users would seem to fall into any of several areas:
1. Businesses who operate out of cellular range, in fixed locations, such as mining camps,
2. Businesses and individuals who operate out of cellular range in moving locations, such as truckers, salesmen, (including in "swiss-cheese" areas),
3. Onshore pleasure boats,
4. Offshore pleasure and commercial boats and ships.
5. Novelty users (who buy things just because they are new and are theoretically better, even though they offer no real advantage to the purchaser--Maurice might buy one even though he spends all his days and nights in front of his PC, just 500 yards from a CDMA basestation :o))
6. Well-off individuals in areas not covered by cellular or reliable landlines (for the vacation house in Vermont, perhaps).
Are there any numbers out there to indicate what the real demand might be?
This whole market(ing) thing is critical: To build its business, gstrf will have to get its phones into the hands of users (duh!). That comes down to marketing to the right users. That's where Iridium has apparently been abysmal--and where AOL has shined (to pick up from a thought on the Q thread).
Who will have responsibility for marketing the G phones and contracts? Will it be the telco partners, or G, or a combination? Whoever it is had better focus on the right markets. (A bunch of television ads showing some guy visiting Santa won't cut it; and G doesn't work up there anyway).
Related question: How far North will the satellites reach? I have seen numbers like 56 degrees north for their orbits. How much further north will they be able to send and receive?
On capacity: Valueman put forth 300 billion/12 billion as minutes available. But, aren't those numbers largely irrelevant? What matters is how many phones can be supported in a given location, which means some statistical multiple of the number of phone calls that can be supported by a satelite in a given location.
[Valueman--You didn't say what period those 300/12 billion minutes might be used in. Is that per month? If so, that suggests that a given satellite could handle 5 million simultaneous phone calls--which seems improbably high].
I have seen the number 64,000 simultaneous calls on one satellite. But, this does not seem to be right--I'm mixing cellular with G, probably.
Given the number of calls on one satellite, what number of subscriptions can you sell within the geographic area that that satellite (or perhaps two satellites) will be covering at a given time? Say it's 500,000--to pick a number that assumes that you load it so that one fifth of customers can use the satellite at any given time. How many geographic areas are there, or--to put it another way--how many satellites will be within usable distance of customers at any given time? The satellites over the Pacific won't be all that helpful in soaking up demand; they're in the wrong place. So are those south of the equator--there just isn't that much landmass once you go down there. Out of the 48 sats, will maybe a dozen be in useful locations at any one time, to satisfy demand for minutes?
And there is an important distinction here between the two types of demand. Demand for the capability to make calls, and demand for minutes on the satellites. As we have seen in other discussions, people may be willing to pay a fixed amount ($10? per month) just to have the capability to use the phone in an emergency. That can go a long way to covering fixed costs, while not using any minutes. After that, what are the variable costs to G? Not much, I'd think, until demand for minutes got so high that you had to start putting up additional satellites (and that would be a pleasant problem to have!)
The point being that you could charge almost anything you wanted--did I hear 5 cents, Maurice?--on a per minute basis if your fixed costs are covered by the monthly minimum charges. It also points to the ISP pricing model as attractive to G's customers--essentially unlimited usage until all the nodes are filled, then G can step back and tell the users they can only have some (reasonably high) minutes free; after that you charge them. That's on top of any cellular charges, of course.
But, back to capacity. A dozen satellites, with 64k available circuits each, suggests 768,000 usefully available circuits at any one time. Knock that in half, because half the world will be asleep, and that's 384,000 circuits available. Times 5, to permit statistical over-booking, and that comes to 2 million "subscriptions" that can be sold.
I've done something wrong, because those numbers don't work economically:
1. Number of circuits per satellite: 64,000. (Equals 64,000 simultaneous calls?)
2. Number of satellites in useful locations at any time: 12?
3. Divide by 2 to allow for people sleeping (the capacity issue)?
4. Factor to allow for over-booking: Times 5?
5. Revenue per customer: $20 per month?
6. Total revenue--$460 million per year?
Somebody want to help out?
I've written this post off-line, and raised a lot of questions that I can answer on-line, I think. I will post it, and go investigate. In the meantime, if anyone wants to clarify my thinking for me, please feel free (as if anybody on this thread needs the invitation!) :o) |
