These are the 2 most mercurial personalities on the planet.
Not only is improbable that the partnership will last, it is destined to not end well. Mercurial leaders are not additive, they’re exponential.
Fasten your seatbelts everyone.
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Owning a cell phone is not the same as “expensive internet service.” The cheapest Starlink plan is $600 per year. 70% of the global population earns less than $3,600 per year. They can’t afford that kind of internet plan. It’s a rich person’s product (for the global version of high income, which is anyone earning more than $15K per year).
They can carve out a wonderful business doing that - but they’re not getting a billion subscribers and also having a PE of 40.
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The trajectory will be: more launches → more satellites → higher bandwidth / lower cost / more coverage → more subscribers.
Rinse and repeat.
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Even so. Most of the people in the world are too poor to pay for a premium internet plan - even if it gets cheaper than Starlink’s current prices. Someone earning $2K per year isn’t paying Starlink a price that earns them $250 in profit. The maximum number of customers for your service is finite - it’s mostly folks who are among the global upper- and upper-middle- income levels. It might be more than a billion people; it’s certainly not more than two billion people.
If you have a billion customers, you can’t keep growing at 40% per year for very long. So you’re not going to have both a billion customers and a P/E of 40.
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6% of the worlds population can easily afford Starlink. It is already approved in 100+ countries. You underestimate the wealth being generated in developing countries.
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FBI will shrink
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You don’t get to have a PE of 40 if you’ve already got everyone that can afford your product already signed up. A PE of 40 means that you’re still expecting to have massive future growth from where you are at that moment. Plus, you’re not going to get 100% of the people who can afford your product to buy your product.
Yes, there is wealth in developing countries. But nowhere near what’s in the developed countries. Most people in most developed countries are poor. 70% of the global population lives on less than $10 per day. We all hope that changes. But it’s not likely to materially change over this time frame. That 70% isn’t going to be able to spend more than 10% of their income on internet service any time in the next decade.
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6% is not saturation.
Moreover, SpaceX offers more than just Starlink. Other revenue streams include Private Payloads to orbit, NASA contracts, Govt. Defense contracts. This all is growing streams of revenue.
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Again, the market for satellite internet services is not every human on earth. More than 70% of humans subsist on $10 per day or less - they absolutely can’t afford this service. By the time you get to that number of subscribers, you’ve signed up close to 40% of the people on earth who could afford it. Only about 16% of the world’s population lives on $20 per day or more (about $7K per year). I don’t think you can sell a premium internet connection to very many people below that level.
So yeah, you’re pretty saturated at that point.
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IMO, most people who have internet service are not going to switch to a new service, especially if it costs more and requires a satellite dish to be installed vs just sticking with their current cable, fiber or 5G service.
Your home cable or fiber still works in bad weather and is already in place.
Your 5G service works at home and goes with you with your phone.
Starlink is great for people not able to be served by the 5G networks or home/business cable/fiber). But why would the vast majority of consumers need Starlink instead of what they have today?
Mike
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Will work everywhere in the world and better.
True for those areas of the world which are poor and don’t have developed infrastructure. Which sort of argues against the “rich” part of the argument, but…
Will certainly have higher latency and lower bandwidth than physical lines, so….
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But is it as seamless as a cell phone? Does it work indoors or do you have to install a dish and a WiFi router to get the indoor connection? And if you have to do this, as a consumer, why switch from your current home ISP provider?
Mike
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As X grows, legacy media shrinks
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::chuckle::
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Starlink now closer to providing Direct to Cell
Very unlikely for the same reason why Tesla doesn’t own 90% of the BEV market. China is building its own starlink system that will no doubt be subsidized by the government for Chinese citizens.
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Meanwhile we need to rip another month off the calendar. Soon to be another year gone.
GM has 10 EV models. Most if not all of the dealers are local repair shops.
Building a Starlink like system is very hard to do. Moreover, the Starship (once operational) is the only one that can launch the next generation of Starlink satellites. This makes the barrier to entry even harder.
The complexity is similar to building a competition to the Nvidia Blackwell system. The barrier is very high.
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Speaking of Grok:
11/14/24
User Gary Koepnick asked the AI which person spreads the most information on Twitter/X—and the service did not hesitate in pointing a finger at its creator.
“Based on various analyses, social media sentiment, and reports, Elon Musk has been identified as one of the most significant spreaders of misinformation on X since he acquired the platform,”
…
soon after Musk touted the system to his followers in a tweet reading “Use Grok for answers that are based on up-to-date info!”
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