small satellite market growth

The Space Odyssey: Charting the course for small satellite market growth

Thanks to their low cost, simpler launch vehicle integration, and advancements in technology, the number of tiny satellite launches in recent years has increased significantly.

In today’s landscape, the power dynamics have shifted, with compact technologies that easily fit in the palm of your hand, surpassing the once-dominant large and bulky devices of the past. Small, now reigns supreme over big on land, under the water, and even in space.

Complex tasks that once required the deployment of huge satellites, are now being accomplished by single satellites smoothly. For instance, NASA’s Ionospheric Connection Explorer (ICON), weighing approximately 290 kg, single-handedly studies factors and causes that lead to changes in the Earth’s ionosphere.

Tiny in size but thunderous in operation, all while being a fraction of the cost of a single, large satellite, small satellites have revolutionised the way space technology is looked at and have proved to be a companion of the Earth, considering its numerous applications and ease of launching.

Tracing the Trajectory of Space Exploration

The small satellite industry wasn’t always advancing at a pace as high as its current pace but even so, growth in the market was fairly impressive(a growth of ~25%, from 2015 to 2019). But all of this changed when Starlink entered this ‘space’.

In 2018, nearly 328 small satellites (small sats) were launched, followed by only 189 small satellites in 2019. Although 2019 was a down-year for the small satellite sector, the contribution of Starlink soared, accounting for over 30% of the total launches. Despite being a newcomer in this domain, it successfully launched ~60 small satellites within its second year of operation.

Starlink made high-speed internet coverage available almost everywhere with its mega constellation of smallsats. The constellation consists of over 5,442 operational small satellites as of early March 2024, in low Earth orbit (LEO) and a further expansion has already been planned by adding ~12,000 more satellites to the constellation, with half of them targeted by the end of 2024. The company – SpaceX has applied for approval for another 30,000 on top of that.

The huge number of launches by Starlink has also pushed players in the industry towards rethinking their launch targets. In July 2020, Amazon revealed details about its Project Kuiper, where it said that it would invest over $10bn in the project, and secured launch contracts with United Launch Alliance, Arianespace, and Blue Origin. Amazon further revealed that it plans to launch 77 rockets over the next five years, carrying more than 3,200 satellites to the low Earth orbit and its goal is to provide high-speed broadband internet to underserved areas across the globe.

The dominance of Starlink in this space is so strong that countries like China have even started perceiving it as a threat. Thus, in April 2023, the Chinese military revealed its plan of launching ~13,000 low-orbit satellites, through a state-backed project, to compete with Starlink. According to sources, this move is to secure sufficient space for China in the low-earth orbits and also to prevent Starlink from pre-empting low-orbital resources.

China’s state-backed project Guowang, and Starlink combined have >50,000 satellites to be launched in the next half a decade.

What’s the Small Sat Market Revolving Around?

Miniaturisation is the present trend in the new space industry, and it can be seen in the space sats which are going from being mini to micro to nano, pico, and femto, and are developing as powerhouses of tele and data communication. Not only small in terms of sizing, but also weight which has helped improve energy efficiency, resulting in lower power consumption during operations.

The reduction in size not only assures smoother operations but also leads to humongous cost savings. Different sources suggest that the cost for small sats is ~90% lower as compared to traditional satellites. The manufacturing and assembly of a OneWeb satellite together with its launch services is estimated to cost about $1m.

3D printing or Additive Manufacturing is yet another development that has made it possible to manufacture miniaturised yet strong components. Additive manufacturing helps in enhancing product strength at a much lower weight. In May 2022, Mitsubishi Electric came up with an idea of on-orbit 3D printing technology that uses photosensitive resin and solar ultraviolet light for 3D printing satellite antennae in the vacuum of outer space, resulting in eliminating the need for equipping small satellites with large-sized and heavy antennas, before the launch. Additionally, due to advantages like reduced manufacturing time, higher flexibility, and mass production capability, several players throughout the value chain including Relativity Space, Boeing, Rocket Lab, Virgin Orbit, etc. are increasingly deploying 3D printing technologies in satellite launching and manufacturing.

A Space-View of the Market

The demand for small satellites is driven by various factors, including agile development and deployment, the proliferation of constellations for global coverage, enhanced data analytics capabilities, and integration of Artificial Intelligence (AI) and Machine Learning (ML) along with the rising of space exploration activities, competitiveness, and the idea of reducing the cost of launching miniature satellites into outer space. From ~USD 1.2bn in 2019, the global market for small satellites surged to ~USD 5.6bn in 2023, exhibiting a staggering 400%+ growth, according to a report from Stratview Research.

Growing Demand for Small sats – Communications and Beyond

The goal of privately and state-owned organisations to capture the maximum possible range of the communication spectrum through deploying mega-constellations can be attributed to the rapidly surging number of small sats. The ever-increasing demand for high-speed internet connectivity, low-cost satellite broadband services, etc. are among the key factors driving this demand. Currently, communications amount to > 70% of the small sats fleet, with earth observation, technology development, and scientific purposes taking up the rest of the share for the rising need for remote sensing, environmental monitoring, disaster management, and geospatial intelligence.


Zooming in on the High-Growth Regions

Most leading SmallSat companies hail from the US, where the commercial space industry is at its most developed, with strong government support through agencies like NASA, the US Space Development Agency, and the Department of Defense. With more than two-thirds of the market share according to Stratview Research, the United States currently has the largest fleet of small satellites, with over 4500+ in orbit, with a significant contribution from companies like SpaceX, Rocket Lab, and Planet Labs.

However, China is also rapidly closing the gap, investing heavily in its own constellations with investment in government and commercial small satellite initiatives. Europe currently has the second largest fleet size and APAC currently accounts for >10% of the global small sats fleet size.

The leading market player, as is evident, is SpaceX, which claims to be capable of building up to 55 satellites per week and launching >200 satellites per month and has a market share of over 70%.

How much more ‘space’ do we have in the market?

The dominance in the small satellites market is less likely to be shifted in the coming years. Although the demand for satellite-provided services is going to be huge, the ‘backlog’ for satellite launches expected to be completed in the next half a decade is so huge(50,000+ satellites to be launched by just two organisations) that shifting the dominance will be an extremely difficult task even for the heavily funded players.

The downside to such ambitious targets however can be the implementation of stringent regulations aimed at restricting satellite launches to mitigate resource depletion in the orbit and also to keep more ‘space’ reserved. Concerns regarding increasing space junk will also act as a limiter to some extent.

The small satellites market holds significant growth potential in the coming decade; however, projections suggest that saturation may occur approximately a decade from now, with a few dominant players controlling substantial market shares.

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