![\"\"](\"\/Assets\/Image\/Imports\/20110801\/hi-res_Matt_Desch.jpeg\")
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Iridium is one of a number of highly ambitious MSS operators looking to make an impact across a variety of enterprise and commercial markets. Its long-term buzz circles around its ambitious Iridium Next constellation backed by $1.8 billion in ECA Coface credit, which will be at the centerpiece of the operator\u2019s strategy during the next few years. The first Iridium Next satellites are expected to launch in 2015, following a five-year development plan that started in 2010.<\/p>\n
Iridium CEO Matt Desch, a 2010 Via Satellite<\/i> Executive of the Year nominee who was recently appointed to serve on the U.S. National Security Telecommunications Advisory Committee (NSTAC), spoke with Via Satellite about the latest developments for Iridium Next, why the company has increased its handset revenue outlook, MSS opportunities for hosted payloads and what lies ahead for mobile satellite\u2019s most dedicated markets. <\/p>\nVia Satellite:<\/i> With Iridium one year into its contract with Thales Alena Space for Iridium Next, how is the constellation\u2019s space segment progressing?<\/h2>\n
Desch:<\/b> We\u2019re about 20 percent of the way complete toward the first service launch and it\u2019s going very well. I\u2019ve noticed that that when other satellite providers win contracts like this, they will have already lined-up their team and confirmed the subcontracts before they win the initial business so that when the deal is signed, the team building is pretty much done. Thales goes through this process a little differently because of its commercial heritage. They line-up their team and win the business and then go back and start negotiating the final deals with their subcontractors as they go. This way, they have a couple of choices and options in getting that done. At this point, Thales pretty much has the full team assembled. We\u2019re early on in the design phase and we already received some pictures and specs from Thales and we\u2019re moving onto a preliminary design review at the end of this year or early next year.<\/p>\n
The space and ground segment together is all part of our two-pronged, $3 billion plan. If you add up all the companies associated with this project, we have about 30 major companies working as sub-contractors that are part of Iridium Next. This is a multi-national, multi-company undertaking. The goal for our ground infrastructure for Next would be that its all in place by early 2014, which supports the current network and gives it about a year of readiness before the service launches. <\/p>\n
Desch:<\/b> These projections sound consistent with what I\u2019ve heard in the public safety industry during some recent discussions I\u2019ve been a part of. I can tell you that there is still a lot of interest in broadband for fire and police. They all want the same applications that consumers expect to have on their iPads or whatever devices they may have. These capabilities help first responders do a better job. I think MSS and FSS will play a broad role in delivering these services. I think there will be a desire for higher speeds and support and, from Iridium\u2019s perspective, we\u2019ll be ready to support them with the current products we have and Iridium Next will give us even more capability to do so. <\/p>\nVia Satellite:<\/i> What role did Iridium play in forming the Hosted Payload Alliance, considering that your executive vice president of marketing, Don Thoma, is chairman of its steering committee?<\/h2>\n
Desch:<\/b> We did play a leadership role in putting the Hosted Payload Alliance together. The reason why is because Iridium has a unique, time-limited opportunity in hosted payloads. Most other larger satellite companies launch spacecraft with hosted payloads a few times per year on a regular basis. For them, getting hosted payloads on satellites is an opportunistic, year-by-year kind of activity. We have a huge opportunity, but it\u2019s only for the next couple of years or so. We were operating on our own basis, but felt pretty strongly that this was a long-term opportunity for the whole industry.<\/p>\nVia Satellite:<\/i> What factors lead you to upgrade your handset revenue forecast early on this year?<\/h2>\n
Desch:<\/b> The driver behind the growth has almost solely been our new 9602 transceiver. In the past, we found ourselves being too conservative with 9602 projections, but we\u2019ve seen it develop to the point where its size and price performance have been extremely well received across a wide range of markets. We work so that our customers can say that Iridium is the best option on multiple fronts \u2014 coverage, real-time speed and message sizes so you can get more data through in a burst. The only problem that we tend to run into is that our devices are a little bit too expensive. Our goal was to fix that by the time we came out with the 9602. <\/p>\nVia Satellite:<\/i> Do you think Iridium could eventually capture this same kind of success in the general consumer markets?<\/h2>\n
Desch:<\/b> We\u2019re not expecting to see too much consumer development this year, but we\u2019re counting on it in the long-term. The development will come as Iridium moves toward consumer-size devices that could take advantage of the small size of our 9602. I think we\u2019ll have at least six different consumer-like devices come out in the near future that could generate significant volumes themselves. Cost is extremely important to that development. For now, we have more than 100 different partners that are building the 9602 into their solution. We\u2019re seeing a lot of activity in the trucking, mining, transportation, fishing and tracking industries. There are so many different ways the 9602 can be used and we are deploying a lot more units because of it. <\/p>\nVia Satellite:<\/i> You\u2019ve also stated that lower production costs have helped generate higher handset revenues. How have you cut down costs for handsets on the manufacturing side?<\/h2>\n
Desch:<\/b> There\u2019s a misunderstanding out there that we have higher costs than our competitors because we\u2019re priced higher. That is not true. In fact, we probably have the lowest costs of anybody. The reason we price higher is because we can. The phone works in more places and has more value to customers because of its size and its features.<\/p>\n
We significantly lowered the cost of production when we made the 9555 handset and we\u2019ve continued to make cost reductions every year since. We even have a number of cost-reduction plans scheduled for implementation in the next year or two. The primary element that will lower your overall costs is the cost of components and we have done a lot of work in the last two to three years to \u201csiliconize\u201d more and more components in our handsets. The work that went on in the 9602 actually paid big benefits into our 9555 handset because we\u2019re able to take that technology and put it into our handset. The same thing happened with our machine-to-machine device. We invested almost $20 million into silconizing the many discrete components of the 9602.<\/p>\n
Another cost-cutting factor is that we produce larger volumes of phones. If we\u2019re making 50,000 to 100,000 phones a year, we\u2019re going to get parts at lower prices than competitors making 1,000 to 30,000 phones. We also have worked to lower our conversion costs, which is what your manufacturing company makes in terms of the effort it takes to produce and the amount of automation it has on the process, etc. <\/p>\n
Desch:<\/b> Our competition has encouraged us to lower the price of our phones somewhat and we are selling our phones at a lower price this year than we\u2019ve ever sold them before. Our prices in the market, which are still a little higher than others, have come down more than 30 to 40 percent during the past few years. While that was always our plan, we were fortunate enough to reduce costs at the same time. We\u2019re still making considerable margins, but not quite as much as we made four or five years ago.<\/p>\n","protected":false},"excerpt":{"rendered":"
Iridium is one of a number of highly ambitious MSS operators looking to make an impact across a variety of enterprise and commercial markets. Its long-term buzz circles around its ambitious Iridium Next constellation backed by $1.8 billion in ECA Coface credit, which will be at the centerpiece of the operator\u2019s strategy during the next […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-84464","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84464"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=84464"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84464\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=84464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=84464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=84464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}