New Satellite Facility In Florida Marks Amazon’s Push Into The Internet Space Race

The facility is a decisive step forward for Amazon to take on Starlink, which cornered the market early on and is flying ahead (literally).
New Satellite Facility In Florida Marks Amazon's Push Into The Internet Space Race

Key takeaways

  • Amazon has started building a $120 million processing facility as part of Project Kuiper, its satellite internet service
  • The e-commerce conglomerate wants to take on Elon Musk’s Starlink, which already has over 4,000 satellites in operation and is set to close in on 2 million subscribers by the end of the year
  • Amazon’s share price has climbed 50% so far this year, with satellite internet offering a potential new revenue stream

Buckle up: Amazon is going out of this world – literally. The shopping titan already has the Blue Origin commercial space flight company and is now moving into the nascent internet satellite market with Project Kuiper, building a new Florida facility at the historic Kennedy Space Center.

The facility is a decisive step forward for Amazon to take on Starlink, which cornered the market early on and is flying ahead (literally). Can Amazon catch up enough to offer a competitive alternative, or will investors prefer a behemoth like Amazon over the unpredictable billionaire Musk? Here’s what we know so far.

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What is Amazon’s Project Kuiper?

Project Kuiper is Amazon’s latest venture into the fledgling internet satellite sector. As part of its efforts to bring fast, affordable internet to every remote corner of the world via a low-orbit satellite network, the e-commerce giant has begun construction on a $120 million facility at NASA’s Kennedy Space Center in Florida.

Amazon eventually plans on having 3,236 satellites operational as part of its constellation network. There’s a bit of a timer on the whole project – Amazon’s FCC license means it needs to have half of its satellites in operation by 2026.

There aren’t any details yet on the pricing structure for the service, but Amazon has stated that “affordability is a key principle of Project Kuiper”. It’s also unknown whether the service will be offered to Amazon Prime subscribers first. The lowest speed available will be 100 megabits per second, with packages all the way up to 1 gigabit per second.

What’s the latest on the Florida facility?

The processing facility will be used to prepare and integrate the internet satellites with Amazon’s Blue Origin and the United Launch Alliance’s (ULA) rocket ships ahead of launches. The facility is being built on the historic Shuttle Landing Facility, now managed by Space Florida.

Amazon plans to have full-scale production launches and ‘early customer pilots’ as early as next year, with its Washington-based satellite manufacturing plant set to be up and running later in 2023. The new Florida site will be the one to receive the shipments and connect everything together before launch. The company also plans to launch two prototype satellites in the coming months.

In a statement, Steve Metayer, vice president of the Kuiper Project, said Amazon is “proud to partner with Space Florida to bolster the growing space industry in Florida and elsewhere across the United States” and that the facility will create new jobs in the area.

Who else is in the internet satellite space?

There’s only one other major competitor that Amazon should be worried about: Elon Musk’s Starlink, which already has a massive headstart in the sector with over 4,000 satellites in orbit, with plans to expand the network to 7,500.

Starlink is part of SpaceX, which is now considered the most valuable aerospace and defense company by market cap in the Western world. With an estimated value of $150 billion, based on an existing investor share sale at $81 a piece, it’s now beaten out Boeing and Raytheon Technologies to the top spot. In short: SpaceX has a lot of capital to invest in Starlink’s future.

The service is also popular with consumers – Starlink recently crossed the 1.5 million subscribers threshold, with a third of the new subscribers joining in the first half of 2023 alone. The internet satellite business is on track to close out the year with 2 million subscribers, putting sales at an estimated $2.5 billion to $3 billion.

Starlink has a subscriber base across 50 countries, with enterprise clients in the maritime and aviation sectors now said to be interested in the satellite network’s potential. SpaceX’s president, Gwynne Shotwell, has previously stated that the potential addressable market for satellite internet is $1 trillion.

It’s no wonder Amazon wants a piece of the action. The conglomerate has already reserved a whopping 77 heavy-lift launches with Blue Origin, the ULA and Arianespace to get its satellite constellation up and running.

Amazon’s recent market performance

As part of the Big Tech pack, which has performed exceptionally well this year, Amazon’s share price has gained 50% this year to date and is currently trading at $128.80. Satellite internet is a longer-term play for Amazon, but offers a potentially massive revenue stream for the company.

Amazon has been buoyed by promises of generative AI coming to a suite of products, its cloud computing division, AWS, performing well and a recent boost from Amazon Prime Day, where shoppers spent an estimated $12.7 billion – Amazon’s single largest sales event on record.

The conglomerate hasn’t been without its issues – striking Amazon workers have made headlines, and the FTC has a bone to pick over several aspects of Amazon’s business – but that hasn’t halted the stock’s upward trajectory.

With Amazon’s second-quarter earnings just around the corner, the risk is that some of the stock gains this year could be lost if the e-commerce giant misses any of its targets. Investors will be looking for strengthening ad revenue as the economic picture has improved and signs that Amazon Web Services (AWS) is picking up again as businesses resume spending.

The bottom line

Amazon is following in SpaceX’s footsteps in a bid to take a bite from some of Starlink’s market share. While Elon Musk might not be happy about it, competition is good news for consumers and investors will be looking to see how Amazon can capitalize on the industry, given it requires a hefty upfront spend to get going.

But Amazon has the resources to make it work and the clout from Blue Origin to get the operation up and running quickly. Providing there are no hiccups, expect to see Amazon offering internet packages sooner rather than later.

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