Project Kuiper: Amazon Bets $10 Billion on the Future of Space Commerce

Doug Mohney is the Editor in Chief of Space IT Bridge, which tracks the business of space-based satellites. He has been working in and writing about IT and satellite industries for over 20 years.

“It’s All About the Long Term.” Jeff Bezos, Amazon.Com 1997 Letter to Shareholders.

Amazon has always had a fondness for the aerospace industry, but its Project Kuiper satellite broadband constellation goes far beyond simply selling cloud services to a specific market sector. The company plans to spend a staggering $10 billion dollars to build a high-speed satellite broadband network, which was approved last week by the Federal Communications Commission.

How much of this is good business and how much is part of founder and CEO Jeff Bezos’ long-term vision for space colonization?

For some, the answer is clear. “As big as Amazon is, to Bezos, Amazon is merely the means to an even bigger end,” said Steve Anderson, author of the best-selling book The Bezos Letters. “Six or seven generations from now, when his future great-grandchildren have great-grandchildren, Jeff Bezos wants there to be a dynamic, growing civilization being freely enjoyed in space… and he’s using his business, Amazon, to fund that dream.'”

Others believe Amazon’s portfolio expansion is more pragmatic and grounded in the bottom line.

“I believe Amazon is doing this for its own business reasons,” said space industry analyst and consultant Stan Shull. “While Jeff Bezos is aware of opportunities in space due to his involvement with Blue Origin, Amazon is a leader in cloud computing. Adding AWS Ground Station capabilities and now satellite broadband will drive more traffic and services for its core cloud computing business unit.”

Shull said deploying Project Kuiper would drive more revenue, growth, and web services by connecting more consumers globally as well as offer it new government and corporate opportunities by bundling connectivity with web services.

“Amazon is a leader in cloud computing. Adding AWS Ground Station capabilities and now satellite broadband will drive more traffic and services for its core cloud computing business unit.”
– Stan Shull, space industry analyst

“The business case makes so much more sense,” he said. “Making standalone profit from satellite broadband is not easy. Nobody knows if that business case closes. There are questions about user terminals, and the project requires a lot of upfront investment. Amazon almost doesn’t need to break even on broadband services itself. There are enough opportunities to generate more business for cloud and online retail … the synergy is pretty compelling for them.”

A Satellite Network With Huge Ambitions

Project Kuiper’s promise to deliver global broadband will require building and launching 3,236 satellites into low Earth orbit (LEO). There are already at least several hundred people working on the effort, which  started in the spring of 2019, and the company plans to hire lots more to work at its research and development facility in Redmond, Wash. A visit to Amazon’s website shows Project Kuiper had 109 open jobs at the end of July 2020, including 90 positions in hardware development for building everything from satellites to end-user ground equipment.

Amazon emphasizes Project Kuiper will provide broadband to the underserved and unserved, both in the United States and around the world.

“We are doing an incredible amount of invention to deliver fast, reliable broadband at a price that makes sense for customers,” said Rajeev Badyal, Vice President of Technology for Project Kuiper in the company’s July 30, 2020 blog post. “LEO-based broadband systems like Project Kuiper present a huge number of challenges, and we have assembled a world-class team of engineers and scientists who are committed to delivering on our vision for Project Kuiper and keeping space a safe, sustainable environment for everyone.

“Combine that with Amazon’s deep expertise in networking and infrastructure and its ability to finance such a huge undertaking, and I am optimistic about the impact we can have for these unserved and underserved communities,” Badyal wrote.

Project Kuiper’s promise to deliver global broadband will require building and launching 3,236 satellites into low Earth orbit (LEO).

Few firms have the audacity to attempt to build LEO broadband networks composed of hundreds to thousands of satellites, and only Amazon has the clear financial resources to complete one without seeking additional funding. Amazon reported a net income of $11.59 billion dollars in 2019 on revenues of $280.5 billion dollars. Even with the impact of the COVID-19 pandemic, the company could invest $1 billion or more per year across a number of years on Project Kuiper.

In comparison, OneWeb raised $3 billion and launched 74 of its satellites before it ran out of money and went into bankruptcy. The UK Government and initial investor Bharti have put up $1 billion dollars to purchase control of OneWeb and resume operations, but analysts estimate it will take $3 billion to $4 billion in additional capital to complete the initial constellation of 648 satellites and turn up global coverage.

Privately-held SpaceX has not provided any details on the finances of its Starlink satellite broadband project. It is in the process of raising $1 billion dollars from investors, according to Bloomberg News, with proceeds going to Starlink and its Starship next-generation rocket Beta testing of Starlink is expected to take place in Canada and the Northern United States this fall, with global coverage available by the end of 2021 when it finishes launching around 1,500 satellites.

Will Space Provide an Edge in the Cloud Wars?

While providing broadband to those without access is a worthwhile endeavor, Project Kuiper is also a substantial expansion of Amazon’s aerospace portfolio unmatched by Facebook, Google or Microsoft. In June, Amazon announced a dedicated business team to focus on the aerospace and satellite industries. AWS Aerospace and Satellite Solutions will “bring AWS services and solutions to the space enterprise, and work with customers and partners around the world to: Reimagine space system architectures; Transform space enterprises; Launch new services that process space data on Earth and in orbit and; Provide secure, flexible, scalable, and cost-efficient cloud solutions to support government missions and companies advancing space around the world,” according to the company’s blog post announcing the new business segment.

Heading up AWS Aerospace and Satellite Solutions is retired Air Force Major General Clint Crosier, former director of Space Force Planning at the U.S. Space Force. Crosier spent 33 years in the military working on space issues with his last assignment leading the effort to standup Space Force as the U.S.’s newest military service. A request to interview Crosier was declined by Amazon’s PR agency.

Crosier’s hire should be no surprise given Amazon’s desire to secure more Defense Department business in general as well as its many existing satellite customers, including startup IoT firms and earth observation companies generating upwards of 100 terabytes of data per day. Massive cloud storage, data processing, and artificial intelligence tools already available on Amazon and needed by space startup companies are enhanced by AWS Ground Station, a purpose-built service directly connecting satellite dishes to Amazon data centers.

Through AWS Ground Station, satellite companies can directly operate their spacecraft through a single interface and service provider, sending commands and downloading information directly into the cloud instead of having to work through third-party networks of ground stations around the world for control and data movement.

A Long-Term Play on New Frontiers for Data

“Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies,” Jeff Bezos wrote in his first letter to shareholders in 1997. “We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”

The question remains: Is space good business for Amazon, or is Amazon a good business to get to space? Certainly Bezos has a deep involvement into space beyond Amazon’s current projects. He was the president of the Princeton University chapter of Students for the Exploration and Development of Space (SEDS) and started the privately-held Blue Origin rocket company in 2000.

Funded from the sale of Bezos’ personal Amazon stock to the tune of over a billion dollars per year over the past few years, Blue Origin has flown a reusable suborbital rocket, is building rocket engines to go into the Vulcan launch vehicle, a replacement for the Boeing/Lockheed Martin Atlas V rocket used by the U.S. government to put military satellites into orbit, as well as its own New Glenn reusable rocket. If that wasn’t ambitious enough, Blue Origin is also leading an industry team to build a lunar lander for NASA to put humans back on the moon.

Amazon and Blue Origin will likely find themselves working together in the future. “We’ll probably see vertical integration with Blue Origin launching Project Kuiper satellites just (as) SpaceX launches Starlink satellites,” said Andrew Cantino, author of The Orbital Index newsletter.

And what the prospects for other cloud powers to make their mark in space exploration? “In my opinion, most aerospace innovation is happening outside of (Facebook, Amazon, Apple, Google and Microsoft),” said Cantino. “SpaceX, RocketLab, Spire, Loft, Planet (while they were part of Google for a while) are mostly fresh companies that have people with both software and aerospace DNA. Totally my opinion, but Google doesn’t seem to have the focus or DNA for projects that take many years to finish and where the limiting factor is hardware, not software. Facebook has only dabbled, as far as I know.”

The payoff on Project Kuiper is likely years away. Amazon expects to start offering service once it gets the first 578 satellites launched, but the company has yet to float a date on when it will start launching satellites or how long it will take to put enough satellites into orbit to support commercial operations.

But it is clear Amazon will be integrating its own independent communications network into its service offerings, for the betterment of its bottom line and potentially to the detriment of its competitors.