Iridium Chose SpaceX for Value and Innovative Management

spacex falcon9


Yesterday Iridium Communications signed a $490 million satellite launch deal–the largest single commercial launch deal ever. The company’s choice of rocket provider? Upstart newbie SpaceX. We spoke to Iridium’s CEO, Matt Desch, to find out why.

Iridium offers what cell phone grids can’t: truly global coverage at a reasonable price. Their latest project, called NEXT, is designed to offer faster data rates, IP-based connectivity, and features like private network gateways.

iridium satellite

Iridum will use two launch providers to place their satellites into orbit. One is still unknown, but yesterday Desch’s company revealed it had chosen Space Explorations, the hottest commercial space business in the news at the moment. Desch revealed that SpaceX’s successful launch of its Falcon 9 rocket a few weeks back wasn’t a factor in the decision, and merely confirmed Iridium’s decision to sign up SpaceX “before they get successful.” The half-billion-dollar deal between the two companies had acutally been signed before the first flight of the rocket.

The choice seems intriguing where there are many established rides to space. Desch confirmed that the nascent rocket company had indeed offered a “great deal” and was the best price available–a significant factor when you’re trying to get 72 800-kilo satellites into the void. Fears about the reliability of the rocket system weren’t even a factor though. Iridium didn’t need Falcon 9’s first launch to be a success, and Desch was “always comfortable” that by the time his satellites came to their slots in SpaceX’s launch schedule, any wrinkles would be ironed out: “25 launches [for other clients] gives them plenty of time to become a rock-solid supplier.”

But here’s the surprise. While technical and financial issues played a big part in the decision, so it seems did SpaceX’s business style. The space industry, which appears high-tech and future-focused, is actually packed with lots of “conventional wisdom,” Desch noted, and many times he’d heard the “old saws like ‘Iridium is bankrupt’ or it ‘can’t replace its network’.” By his own admission he tends to connect more with business colleagues who want to “break conventional thinking.” SpaceX, with its charismatic and controversial CEO Elon Musk at the helm, is very much a company in this mold. And it was clear to Desch that Musk’s company was as innovative as the other ground-breaking new space company, Scaled Composites, but very seriously dedicated to developing a launch capability. Desch even refers to SpaceX’s attitude as a real “we can do it” approach, which parallels how he’s been running his own company. Desch cites, for example, their own NEXT satellites’ built-in “ride share” secondary payload, complete with Earth-monitoring sensors which can utilize Iridium’s network for communications.

The other rocket choice Iridium makes will probably be for a more established space name, perhaps Arianespace. Yet Iridium’s entire next 20-year business rests on these satellite launches and space industry followers will no doubt see the Iridium’s deal with a non-institutionalized company like SpaceX as a good thing.


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