Would this be significant competition for UBNT?

Google is nearing a deal to invest in Elon Musk-founded rocket/spacecraft maker SpaceX with the reported goal of “supporting the development of SpaceX satellites that could beam low-cost Internet around the globe to billions who don’t have it,” The Information reports. A Google (GOOG, GOOGL-SpaceX effort would have competition: Qualcomm (NASDAQ:QCOM) and Richard Branson’s Virgin Group just agreed to invest in OneWeb, a firm that plans to launch 648 broadband-capable low-orbit satellites.


It could be, but probably not anytime soon.

Elon Musk’s plan for satellite internet is even more ambitious than originally thought. At a SpaceX event in Seattle on Friday, the Tesla CEO told Bloomberg Businessweek that his unnamed Space Internet venture could one day stretch all the way to Mars — and it could cost $10 billion to pull off.

Musk expects the project to take $10 billion and at least five years to get off the ground. In the meantime, SpaceX’s resources will be devoted to making satellites in addition to the rockets and vehicles it already manufacturers and tests.




I agree with Brian, Saul. They are trying to figure out how to get satellites in a lower altitude. When they eventually figure it out it will be huge competition to all of the data providers. But I think it could be years away. It is interesting that Google is going in with Musk on this. Did Google’s balloon project (loon) turn out not to be feasible? Or are they just trying anything and everything to get internet to the masses?


Does it make a difference to UBNT whether the internet comes out of a cable or falls from the sky?
Wouldn’t users still require the same or similar devices at the point of internet consumption or managed/controlled distribution (e.g. in an enterprise)?


Getting satellites to lower altitudes is way. But the lower the orbit,the more residual atmospheric traces which creates drag, which slows it down, which takes it into lower orbit, etc

. So from a physics point of view I can see only three solutions

  1. Cost reduction-make them cheap and light enough so that short life doesn’t matter. Included in this would be to make the launch vehicle more efficient thus costing less to launch
  2. include high efficiency boosters on the satellite itself since they are out in space the breakthrough here could be non chemical propulsion
  3. streamline the satellite so drag effects it less- this seems an unexplored option.

Space X seems to be working on option #1 now

Present satellites use much launch tech developed over 40 years ago. Present providers don’t have lots of incentive for real innovation, they are giant companies much like GM. Apparently Russian launchers are old tech but mostly reliable and cheap. Just like a 68 Chevy would be if produced today


Does it make a difference to UBNT whether the internet comes out of a cable or falls from the sky?

The problem Carioca73 is that the satellites would be the provider of the internet to all of the people who have their service. The satellite company would hook directly to the internet backbone thereby by passing UBNT. What the problem is with the Satellites that are in orbit now is that they are to high up, which causes the internet speeds to be to slow because of the lag in time.



What the problem is with the Satellites that are in orbit now is that they are to high up, which causes the internet speeds to be to slow because of the lag in time.

Bandwidth is also a problem for satellites, and adding more requires either adding a lot more satellites or else making the satellites far more capable. Either way is expensive. Nearly every satellite service plan out there today is heavily bandwidth-constrained – if you’re lucky, they might give you unlimited “overnight” bandwidth.

I don’t see this as meaningful competition anytime soon.



Bandwidth is also a problem for satellites, and adding more requires either adding a lot more satellites or else making the satellites far more capable. Either way is expensive. Nearly every satellite service plan out there today is heavily bandwidth-constrained – if you’re lucky, they might give you unlimited “overnight” bandwidth.I don’t see this as meaningful competition anytime soon.

Neil, Apparently Google and SpaceX are just starting their collaboration, so nothing is going to happen overnight, or this year, or next. But it will come. Satellites, and launches will get cheaper and better until Google is providing free access all over. Which, as I understand it, would eliminate UBNT. When I look at my other stocks (BOFI, CELG, CRTO, FB, WAB, AMAVF, PSIX, etc etc), they all seem open-ended. None seem in danger of being put out of business in 5 or 10 years (or even ever, as of the information we have now). In fact all of them look like they will be a lot bigger than they are now. It just makes me feel uncomfortable to be investing in a company facing almost certain “eventual” obsolescence, that we can see coming, even if it isn’t “anytime soon”.

How do you think about it?



Google’s collaboration with spacex is a very different beast than where UBNT operates.

1)UBNT offers network products for companies to build their own networks, what google and spacex are offering is basically internet access which is a very very different than offering network products.

  1. Google is trying to expand who has access to the internet. Once people get access to that internet than that is where UBNT comes in. Heck you don’t even need internet access to use UBNT’s products. You just need the desire to hook one computer to another (to vastly over simplify this)

3)Satellite internet has a few physics problems. Namely latency is higher than other solution. Latency is basically how long it takes to get from point A to point B. Bandwidth should be a very surmountable problem as that is just how many lanes are on your road but the latency problem is unfix-able.

Basically unless something drastically changes this collaboration should have absolutely no bearing on UBNT



Thanks Ethan, you sound knowledgeable!


While all this physics is true, one also has to recognize the nature of the problem. If one is really out in the boonies which no good internet access anywhere near, there really isn’t much except satellite that will get there. Where UBNT becomes very interesting are places where it is possible, if expensive, to get a high quality pipe to one location, and then, using UBNT products, one can service a broad area around that end point. I believe, but I’m not sure, that this is even carried to a 2nd tier in some cases, i.e., the ultimate user connects wirelessly to a tower that is moderately close and the tower connects to a big pipe one way or another. But, could be they are just running fiber to the towers. So, UBNT is a highly desirable technology at the fringe, but satellite attractive in places where one is beyond the fringe, as it were, even though there are latency and bandwidth compromises that go along with the technology … it is still better than nothing.


That is true Tamhas but what spacex is talking about doing is putting satellites at a lower orbit which would allow them to supply bandwidth to people not only at the fringe. I do not know what their business model would be yet but if they provided 10 meg to most people for 10 dollars a month I could see it really taking off. While this wouldn’t effect UBNT’s enterprise equipment it would hurt their airmax product. It would help everyone’s understanding of ubnt’s business if they read up on WISPs.


This is the technology that UBNT provides to internet providers in remote areas.


This is some information on how you can build a wisp using ubnt equipment.



Lower orbit will reduce latency, but is still a long way up there.

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Neil… How do you think about it?

I think my perspective is shaped by how I view the company. I don’t really see them as a WISP business, but rather as an excellent engineering company that has a disruptive, community-driven business model that lets them create great products at a quality/price ratio competitors can’t hope to match. It’s that business model that I care about.

Could the Google/SpaceX venture eventually threaten the WISP business? It might eventually, at least to some extent. But to me it’s a tail risk, and a very long ways away if it materializes at all. There will always be risks in business, especially if you look far enough out.

But WISP is also just one segment of UBNT’s business. Let’s not forget about the very rapid growth of the enterprise segment, which the company expects to make up at least half of their revenue as it expands. That’s nice, but to me the important part is that it serves as evidence that the company is able to successfully replicate their community-driven approach in other product categories (in other words, they didn’t just get lucky with WISP). That gives the company a lot of potential as it continues to expand into adjacent product categories at disruptive prices while simultaneously maintaining high margins. As long as UBNT can continue producing top quality products demanded and shaped by their community of users at disruptively low prices while maintaining excellent margins, I see a lot of opportunity for future growth.

So again, UBNT is all about the business model to me. Product categories will come and go over time. I would become concerned when I start to see some aspect of the business model failing – repeated engineering failures, an inability to successfully enter new product categories, a diminishing user community, movement towards a more traditional model (like hiring of a large sales force), etc.

Ultimately, I think success will follow naturally if the company is doing the right things. It won’t always be in a straight line, and there will undoubtedly be bumps along the road, but I do think that UBNT has a special sauce and that’s why I’m invested in it.



Thanks Neil, you are almost convincing me to take a little position again.

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I agree with you tamhas and do not see how they are going to do it but I like it that they are trying. (Without my money). I think it is important to keep possibilities in mind no matter how remote. Its an interesting world we live in right now.


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Neil, well said and I totally agree

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These satellites will feed the POP not the end user. UBENT is safe.

Exactly spot on. Anyone who has been around computer networks for a while (I go back to IBM 3270 teleprocessing days) has seen bunches of network strategies, products and companies come and go. Novell used to own the enterprise network business, ultimately bought out by Attachmate which in turn was purchased by software developer Microfocus. As far as I know, Microfocus is still in business, but has little to do with networks. I doubt if there are any Novell networks still up and running.

Despite internet provisioning, local networking of various scale will always be in demand. Not everyone can or even should be a direct connect to the internet. This would pose untenable security risks for any enterprise. Even a home network with shared storage and print services is preferable to communication between independently internet connected devices.

UBNT has a disruptive business model. That is their competitive advantage. Products will come and go in rapid succession as technology advances. Network strategies and methods will change as well. You can count on it. So long as UBNT can address user requirements with minimal R&D and essentially no sales force while continuing to provide innovative products at prices that undercut the competition they will be a growing concern.

If the business model breaks down for some reason (can’t scale, too many conflicting requirements, etc.) they may get into trouble, but Google and Space-X provisioning universal internet connectivity pose absolutely no threat. In fact, IMHO, this would be a boon to their business rather than a detriment.


Great write up.

Google has funded a little nonprofit called further reach, which sets up wifi networks in remote areas of California, which are not being served by large carriers. Google provided $3M. They are operating close to us and recently put up pictures of a new tower. Saw the ubnt icon on the equipment.

Making a big difference to a rural area that was paying twice as much to a cable TV provider.

Ubnt is in the nuts and bolts. Most of us I imagine have wifi in our homes. Ubnt is extending that to communities and enterprises. On the backend they keep improving being able to get back to data centers without having to lay, or rent fiber lines.

It’s just radio, at the basic level, but very refined with support software that encourage the buyer to stick with ubnt.

Simple and eloquent.


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