The European Space Agency has set up a series of joint initiatives with academic and non-academic research institutions, called ESA_Lab@ to support disruptive innovation. This network, spread across Europe, performs research and projects on a range of topics that are of interest to ESA and the wider space sector. The ESA_LAB@PoliBa, created at the Polytechnic of Bari in southern Italy has recently published a book titled “Space Economy. Storia e prospettive di business” (Space Economy. History and Business Perspectives) where Antonio Messeni Petruzzelli and Umberto Panniello examine the evolution of the space industry and the corresponding evolution of business models in the industry.
Following their book presentation, the authors summarize their findings in their own words:
We can describe the space industry evolution as composed by three main stages. The first one refers to the old space economy, reflected by the so-called “Moon Race” and was characterized by a technology push approach, a strong relevance of science, a radical nature of innovation, and a low degree of rules and regulations.
The second stage, which is instead the new space economy, being thus the current phase of the space economy, follows a market pull approach and presents a high market uncertainty, and an incremental nature of innovation. Examples of players operating in this new era are represented by SpaceX, with its Starlink micro satellite constellation to provide satellite Internet access, and Blue Origin, the company founded by Jeff Bezos to operate in the field of suborbital flights. Finally, the last stage is the emerging space economy, where companies and institutions’ motivations are mainly driven by the search for new (tangible and intangible) resources, innovation presents an architectural nature, and the investments are characterized by a wider environmental uncertainty, referring to the necessity to operate within different atmospheric conditions. This stage is of course at the beginning of its development and sees the presence of actors as Virging Galactic, operating in the space tourism, Space Pharma, an Israeli company, conducting pharma experiments in microgravity conditions, and Argotec, an aerospace engineering company based in Turin whose research activities use engineering and computing for space applications and renewable energy systems.
Focusing our attention on the new space economy, it clearly emerges how players use to differ from existing (or old) ones because the value propositions of their business are mainly focused on answering to new market needs or on offering new solutions to existing problems instead of focusing solely (or mainly) on technological innovations. This is the case of Amazon, which recently started the Kuiper project consisting in sending a constellation of satellites for building a fast and low-latency broadband connection. The business model of this project is not focused on a new technology, but rather on a new market need (i.e., low-latency connection) that could in turn benefit the current Amazon services (i.e., e-commerce and Web Services) as well as the services of companies in other domains (such as IoT companies, interested in a fast and low-latency connection for their connected objects, or videogaming companies, interested in improving the connection for their video-gamers). It is interesting to note that this shift is due to the reduction of value chain costs for some space technologies and to the need for some companies, whose business models operate on the Earth, to explore the space searching new opportunities for innovating their services or satisfying new requests coming from their customers. To this aim it is also interesting to point out that “space” can enter into a business model from different sides: it can be “market” (e.g., the production of space vehicles), “value proposition” (e.g., SpaceX offering a space travel experience) or “infrastructure” (e.g., the Amazon constellation of satellites useful for improving its services).
For the Italian speakers you can find the book here.
by Antonio Messeni Petruzzelli and Umberto Panniello