{"id":84891,"date":"2011-05-05T18:06:53","date_gmt":"2011-05-05T10:06:53","guid":{"rendered":"https:\/\/wp-productionenv-bjg9h2g2bgg5b8aa.southeastasia-01.azurewebsites.net\/news\/analysts-musks-response-to-launch-price-doubt-reveals-clues-to-spacexs-business-strategy\/"},"modified":"2011-05-05T18:06:53","modified_gmt":"2011-05-05T10:06:53","slug":"analysts-musks-response-to-launch-price-doubt-reveals-clues-to-spacexs-business-strategy","status":"publish","type":"post","link":"https:\/\/starpath.global\/news\/analysts-musks-response-to-launch-price-doubt-reveals-clues-to-spacexs-business-strategy\/","title":{"rendered":"Analysts: Musk\u2019s Response to Launch Price Doubt Reveals Clues to SpaceX\u2019s Business Strategy"},"content":{"rendered":"

[05-05-11] Speaking through an interpreter at the Space Symposium in Colorado last month, China Aerospace Science and Technology Corp.<\/strong> (CAST) Vice President Lei Fanpei hinted that Chinese space officials are skeptical of SpaceX<\/strong>\u2019s set launch prices and admitted that they are too low for China Great Wall Industry<\/strong>\u2019s Long March rocket to match.
\n    \u201cI believe the China and U.S. space cooperation, once initiated, will certainly bring immediate results to the two countries\u2019 space industries, providing more choices for customers from different countries all over the world. I believe that if we all learn from SpaceX, maybe soon China will outsource from the United States,\u201d said Fanpei, referring to statements from unnamed officials over SpaceX\u2019s LEO payload launch rates.
\n    The statement drew a response from SpaceX Founder, CEO and CTO Elon Musk, who took to his company\u2019s blog to defend and outline his business model. \u201cI recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary, premised on capturing a dominant share of the market, or \u2018teaser\u2019 rates meant to lure in an eager market only to be increased later. These prices are based on known costs and a demonstrated track record, and they exemplify the potential of America\u2019s commercial space industry,\u201d Musk said.
\n    China Great Wall, which functions as the marketing arm of CAST, is currently developing plans to open a Washington D.C. office this summer to promote Chinese space products and solar arrays. China has long hoped to revive bilateral space relations after a U.S. policy shift in 1999 prohibited the United States from trading space-related technology with China.
\n    Musk said that Fanpei\u2019s statement only validated the United States\u2019 advantages over China\u2019s space sector. \u201cChina has the fastest growing economy in the world. But the American free enterprise system, which allows anyone with a better mouse-trap to compete, is what will ensure that the United States remains the world\u2019s greatest superpower of innovation.\u201d
\n    According to Musk and additional information provided on SpaceX\u2019s website, the price of a standard flight on a Falcon 9 rocket is $54 million. The average price of a full-up NASA Dragon cargo mission to the International Space Station is $133 million including inflation, or about $115 million considering the current U.S. dollar value. SpaceX maintains that the company has been profitable every year since 2007, with more than 40 flights on its manifest representing over $3 billion in revenues.
\n    \u201cBecause SpaceX is so vertically integrated, we know and can control the overwhelming majority of our costs. This is why I am so confident that our performance will increase and our prices will decline over time, as is the case with every other technology,\u201d said Musk. \u201cWe have a firm, fixed price contract with NASA for 12 missions. This price includes the costs of the Falcon 9 launch, the Dragon spacecraft, all operations, maintenance and overhead, and all of the work required to integrate with the Space Station. If there are cost overruns, SpaceX will cover the difference. This concept may be foreign to some traditional government space contractors that seem to believe that cost overruns should be the responsibility of the taxpayer.\u201d
\n    Beyond China, SpaceX has had its fair share of both international and domestic detractors. Libertarian think tank Lexington Institute <\/strong>Author Loren Thompson harshly criticized Musk\u2019s post in his own response issued May 5, alleging that the launch industry entrepreneur is often \u201clong on opinion and short on detail.\u201d
\n    \u201cNASA<\/strong> can\u2019t seem to get enough of SpaceX, shelling out $2 billion to get its launch vehicles to a point where they can begin lifting payloads into orbit to support the Space Station and other missions,\u201d wrote Thompson. \u201cMusk and his investors have only put about one-tenth of that amount into SpaceX, even though they present the company as an entrepreneurial, market-driven undertaking. The stodgy traditional suppliers that Musk thinks are being left behind by history \u2014 Boeing, Lockheed Martin and their ilk \u2014have managed to invest $4 billion of their own money in developing new launch vehicles, which is a lot more money than the government put into their projects. So who\u2019s really taking risks here, and who is just relying on taxpayer dollars to build a business?\u201d
\n    One industry analyst, who asked not to be named for this story, told Satellite News<\/em> that some may take Musk\u2019s statement that his prices are verified by independent sources as a sign that the company has conducted its own audits. \u201cSpaceX has gone on the record that the company might consider an IPO late in 2012. The language here tells me that plan is underway. If it can maintain its relationship with NASA through the COTS investments and continue to establish trust with the Merlin engine, it should cut down the number of its critics,\u201d the analyst said.
\n    Musk said he has become a veteran of criticism. \u201cWhenever someone proposes to do something that has never been done before, there will always be skeptics. So when I started SpaceX, it was not surprising when people said we wouldn\u2019t succeed. But now that we\u2019ve successfully proven Falcon 1, Falcon 9 and Dragon, there\u2019s been a steady stream of misinformation and doubt expressed about SpaceX\u2019s actual launch costs and prices \u2026 SpaceX intends to make far more dramatic reductions in price in the long-term when full launch vehicle reusability is achieved. We will not be satisfied with our progress until we have achieved this long sought goal of the space industry.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

[05-05-11] Speaking through an interpreter at the Space Symposium in Colorado last month, China Aerospace Science and Technology Corp. (CAST) Vice President Lei Fanpei hinted that Chinese space officials are skeptical of SpaceX\u2019s set launch prices and admitted that they are too low for China Great Wall Industry\u2019s Long March rocket to match.     \u201cI […]<\/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-84891","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84891"}],"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=84891"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84891\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=84891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=84891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=84891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}