SpaceX's reusable rockets could open up the satellite business for smaller companies.
Elon Musk's space exploration company launched and successfully landed its first recycled Falcon 9 rocket Thursday night:
If the reusable rockets deliver on their promise to lower launch costs by up to 30 percent, it could push growth in a few key areas of the satellite market.
SpaceX's current base launch price of $62 million for a Falcon 9 rocket is already solid discount over its competitors. But the price is still a bit too high for smaller companies wanting to send satellites into space.
Bringing the cost closer to $40 million leaves the door open for a broader array of satellites at different orbital levels, serving different needs. It would be especially effective if SpaceX's few competitors begin adopting its cost-saving measures.
"It would open up the ecosystem to satellite companies that can't afford these high costs," said Andrew DeGasperi, an analyst with Macquarie. "In my mind, that is probably going to increase the number of players in orbit, probably going to increase competition, probably going to drive costs down across the board."
Particularly notable are an emerging crop of satellite providers that are launching constellations of tens or even hundreds of satellites into Low Earth Orbit (LEO).
Unlike the further-out geostationary orbit, where many established satellite companies operate, LEO satellites do not orbit in a fixed position above the planet. Instead, they glide above the planet's surface. But getting adequate coverage requires a massive constellation of those satellites — sometimes numbering in the hundreds.
This will require a lot of launches, even if several satellites can be launched on the same rocket. For example, satellite communication provider OneWeb plans to send a constellation of nearly 700 satellites into Low Earth Orbit, Wells Fargo analyst Andrew Spinola said in an interview with CNBC. The company plans to use its constellation to provide internet service to individuals no matter where they are on Earth.
SpaceX also plans to launch its own constellation of around 4,200 LEO satellites, and Samsung has its own plan for a constellation of 4,600.
"There is a number of innovations you need to make these LEO constellations work, and if you can reduce the cost of these launches, that is a significant benefit," said Spinola said.