Northern Sky Research

Commoditization in Earth Observation?

Jul 16th, 2013

The EO commoditization trend has certainly progressed.  As SkyBox Imaging prepares its first two satellite launches in 2013 with a final constellation count of 24+ 100kg-class satellites delivering 1m imagery, PlanetLabs’ recently announced its plans for a constellation of 28 nanosatellites (≈6kg each) providing 3 to 5 m imagery.

SkyBox Imaging and PlanetLabs mainly compete on their imagery pricing and revisit-time. As virtually no information is publicly available on both companies’ satellite capabilities, their success potential remains largely a question mark. It is however possible to assess commoditized satellites by taking a look at SSTL’s satellites, which spearheaded the EO commoditization trend in the last few years.

In 2011, SSTL inked a deal with China’s 21AT for $170 million to build, launch and insure three optical satellites based on its SSTL-300 platform (1m GSD, 350kg). The constellation (named DMC3) will be able to image 1 million km² every day over its design life of 7 years. Taking inflation into account and excluding OPEX, this results in a $70,000 per million km² price tag for their imaging capacity over their design lifetime.

In 2009, Astrium announced its SPOT 6 & 7 satellite program, with no governmental funding, at a price of 300 M€ for both satellites based on its Astrosat 500 MkII platform (1.5m  GSD, 720kg). The constellation will be able to image 6 million km² every day, and the satellites’ design life is 10 years. Adding other costs (such as launch), taking inflation into account and excluding OPEX, this equals $20,000 per million km² of imaging capacity over their design life.

SPOT’s constellation features a much lower price tag than DMC3 ($20K vs. $70K). Both constellations are using cheap launch vehicles (Dnepr for DMC3, PSLV for SPOT). However, SPOT’s satellites will have a slightly lower spatial resolution than DMC3 satellites, which has an impact on CAPEX explaining part of the difference between both constellation costs per square km. Nonetheless, the difference remains important and may explain why, despite impressive achievements, the EO data market is not based on companies operating small commoditized satellites.

While commoditization decreases satellite size at a constant ground resolution (such as SkyBox Imaging’s 100 kg satellites delivering 1m imagery) as well as the CAPEX required, the imaging capabilities and performance of the resulting satellites are much lower than those of cutting-edge satellites; so much so that their ratios of cost vs. imaging capability are much lower. The result is that imagery from cutting-edge satellites ends up being cheaper.

Bottom Line

What commoditized satellites bring is not cheaper imagery but a lower minimum CAPEX for a source of imagery (high or low resolution). This decreases the minimum cost for constellations, meaning less funding (less risky), thus lower revenue to breakeven, therefore requiring a smaller addressable market. At the same time, constellations propose higher revisit-times, which is a unique and much sought-after differentiation aspect for time-dependent applications.

Public information on SkyBox Imaging and PlanetLabs satellites is scarce, and they may end-up demonstrating a breakthrough in EO satellite manufacturing. Until such a breakthrough, commoditized satellites’ main differentiation factor seems to lie on revisit-time more than imagery cost.

Information for this article was extracted from NSR's report Satellite Manufacturing & Launch Services, 3rd Edition.