Rent This Space: The Business Model of Space as a Service

Today, people who want to get data from space have more options than ever before. They can buy the data from a space company. They could start their own space company — either through building capabilities in-house, or using partners throughout the value chain, like satellite manufacturers, ground segment providers, and rideshare companies. It’s like a choose your own adventure.

Space as a service, also referred to as satellite as a service, is another path space adventurers can take. Similar to renting “space” in space infrastructure — a SaaS provider takes care of the space segment, while the customer has control over their data, payload, or satellite.

“Infrastructure as a service is perhaps the best way to describe it,” says Joel Spark, vice president of Space Systems at Spire. “There's a service element to it — it includes the manufacturing of the satellite, launching, the on-orbit checkout. But we're really focused on what the service looks like. At the end of the day, it's the customer sitting there, with no human in between them and their payload, tasking operations of their fleet through an API.”

Spire has a constellation of more than 100 cubesats that collect radio frequency data. The company’s primary business is data products in weather, aviation, and maritime markets, but it also sells infrastructure as a service, like Spark said, through its Space Services business. Customers have access to Spire’s full infrastructure including satellite, spectrum, and ground station, and can operate their physical or software-defined payload through Spire’s constellation.

This model is gaining traction, and more companies are getting involved. Spire, for example, debuted its Space Services offering after it was established as a space data company, and signed a deal in September 2021 with Myriota to deploy its constellation, its first large-scale, commercial, IoT-focused customer.

In recent investor presentations, Spire estimates the total addressable market for space services at $39 billion and said the company is in the “very early stages” of penetrating the total addressable market.”

Launchers are getting in the game too, to harness the value of vertical integration including direct access to space. Rocket Lab is expanding beyond launch with its Space Systems business, which offers complete missions including spacecraft, design, build, launch, and operation as a bundle. Another launcher Astra, for example, has expressed intent to expand into space technologies and deliver space services.

Sidus Space, which is looking to make an impact with space as a service, takes a wide view of what the offering should encompass.

“When I describe our company, I describe it as space as a service with a capital S,” says Carol Craig, CEO of Sidus Space. “What it really means is cradle-to-grave, and everywhere in between. It isn't just about a satellite constellation and providing data, it's really supporting all needs related to space.”

Craig, who built aerospace and defense contracting company Craig Technologies, formed Sidus Space to offer complete space services. The company offers hardware manufacturing; assembly, integration, and testing; engineering support; and is now developing the LizzieSat constellation, a multi-mission constellation to support custom payloads and missions.

The LizzieSat is a 100 kilogram satellite platform manufactured in-house. The first one will launch later this year depending on launch schedule and deployed off the International Space Station (ISS), and support NASA’s Astra program and blockchain company Mission Helios.

One reason customers choose this route for space sustainability and to reduce costs, Craig says. She describes the push for space as a service as a more collaborative and sustainable trend in the industry, pooling resources to access data from space responsibly.

“We all don't want to end up with 25,000 to 40,000 satellites over the next 10 years, like some are projecting. There is no need for that,” she said. “The second reason is cost — not only the cost of a single mission, but the cost of infrastructure and liability. By nature, it’s going to be less expensive than building your own satellites.”

There are a number of different ways to present the SaaS offering — companies differ in the level of service offered and bus sizes — but this model is expanding the ways people can deploy missions in space or get data from space.

Potential customers need to discern if they want to be a regular customer and purchase space data from a company, or if they want to participate in the mission.

“If you just need imagery, you don't come to us. But if you want your own dedicated mission that you are capable of tasking and controlling and want to be able to process data that you collect, then you should go with Loft. We are providing missions — we aren’t just providing raw data,” says Alex Greenberg, co-founder and COO Loft Orbital.

Loft Orbital, founded in 2017, offers space infrastructure as a service, and Greenberg compares it to offering the Lego building blocks of a space mission. The company is not a manufacturer, it procures satellite buses in every size class up to 200 kilograms.

Loft Orbital produces the adapter between the payload and platform, with the avionics and electronics, called the Hub, which has an on-board compute capability that is a differentiator for Loft. The company then integrates customer payloads and flies customers on regularly scheduled missions. Customers can then operate their payload through an API.

Greenberg sees reception of the business model changing. In the early days, traditional companies or governments were difficult to convince, but now many more understand the value proposition. Loft Orbital has around 25 signed customers including NASA, DARPA, and Honeywell. Loft Orbital has two satellites on orbit, YAM-2 and -3. The name YAM — Yet Another Mission — pays tribute to the company’s goal to make access to space completely routine.

He sees the business model gaining more steam in the future.

“Do I think the idea of one-off, bespoke satellites [will] go away completely?” Greenberg asks. “No. Absolutely, there are certain missions where that makes sense. But I think Space as a Service is going to be the dominant way that small payloads get to orbit in the future.”

Yet he is “cautiously optimistic” and “skeptical” at the same time about this business model expanding beyond the space industry, attracting non-space companies to have their own missions in space.

“Our typical customers are either legacy or existing, savvy space companies or government organizations that want something in space and will do it whether or not we exist. We present a faster, simpler, more reliable way for them to get that mission to space and operate it. That’s a big chunk of our addressable market,” Greenberg says.

Another part of the addressable market that is smaller today but shows a lot of potential, Greenberg says, is companies that want data from space but don’t have a lot of in-house space capabilities. IoT company Totum Labs, for example, is a smaller company deploying its space segment with Loft Orbital. This model allows companies like Totum Labs to focus on payload development and their service instead of the full space segment.

Another example is Canadian company NorthStar Earth & Space, which is focusing on space situational awareness and debris monitoring, also chose to deploy its constellation through space as a service, through a deal with Spire.

Multiple providers also mention governments of smaller countries are a market for this type of offering. These countries may want to control their own space capabilities but not have the resources to build a full satellite program within their country.

A customer “still has to be someone who's interested enough to not just buy the data. Usually they have some expertise or desire to actually control the operation of the satellite,” says NSR analyst Brady Grady.

While there are a lot of benefits to the customer in this business model, NSR research found that the opposite situation is happening more frequently. Instead of purchasing space as service, potential space companies are more often moving up the value chain to become satellite manufacturers.

“A player who normally has no interest in buying, managing, or operating satellites, they realize that they want or need data that they don't have and can't get from buying across the industry. So they decide to become satellite operators — and they generally decide to become satellite manufacturers as well,” Grady says. “In some cases, they will go out and buy their satellites, there is a lot of procurement of satellites and payloads. But for many years, we're seeing a rise in in-house manufacturing.”

Grady shares the example of SatSure, a data analysis company in India that recently raised money and started a subsidiary to manufacture its own optical payloads. The company cited “challenges around imagery acquisition in the upstream sector” as a reason it chose to operate its own satellites and manufacture in-house.

In many cases, companies want to have control over the entire process, and proprietary control of the payload, Grady says. Investors continue to place a high value on companies that manufacture hardware as well.

Another factor that could be driving this trend is just how specific customer requirements are. For all the talk about standardization, modularity, and plug-and-play — customers still have very individual requirements and many require unique solutions.

“There's a problem of fracturization. There's a lot of offerings, and every customer is different. It’s very difficult to sell them something when procurement is a conversation,” Grady says. “In most areas of the satellite and space industry, anything that is contracted out is a custom discussion.”

Richard French, director of Business Development and Strategy and Space Systems for Rocket Lab, says there is still a lot of traditional thinking. He thinks the value proposition for space services is obvious, particularly with supply chain scarcity and the ability to use flight-proven hardware, but not everyone sees it yet.

“There’s still a lot of traditional approaches,” French says. “There's still a lot of traditional thinking that you need to own the system or you need to design it all yourself to be successful. There is still a lot of cultural inertia around doing things.”

Responding to that, Rocket Lab will provide an end-to-end service, or participate in a mission as an ecosystem partner with satellite components. This is all part of the company’s Space Services segment.

Despite cultural inertia, Spire VP Spark thinks that spaces as a service will play a role in democratizing space.

“You don't need to be a space company anymore to operate this,” Spark says. “That's always the fun light bulb moment to see people realize that you're not actually operating a satellite. You're just operating your app. It just so happens that it's hosted in outer space, in the same way that people don't know where their servers are anymore.”

The popular saying is that “space is hard,” but space as a service promises to let companies reap the benefits of the work of those who have come before them.

“Space is interesting, but it's almost boring in such a way. If it works, you can just fold it into your portfolio,” Spark says. “In the same way that almost every company is becoming a tech company, our vision is that pretty soon, almost every company will be a space company to some degree.” VS

Captions: Left, Spire has a constellation of more than 100 cubesats and its primary business is data products in weather, aviation, and maritime markets. But it also sells access to its infrastructure through its Space Services business. Right, the Payload Hub is Loft Orbital's universal interface that controls payloads and manages dataflow and resources between the onboard payloads and the satellite bus. It also includes an onboard processor.