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Elon Musk’s government satellite network Starshield will help pump money into cash-strapped Starlink, experts say


SpaceX CEO Elon Musk next to a picture of a Starlink dish.Elon Musk’s SpaceX has launched a government satellite network called Starshield, which uses Starlink technology.

JIM WATSON/AFP via Getty Images/Taras Podolian/Gazeta.ua/Global Images Ukraine via Getty Images

  • SpaceX’s government satellite network Starshield will bring in extra cash for Starlink, per experts.
  • One analyst said Starlink, with one million users, doesn’t have enough customers to be viable.
  • Elon Musk has previously said that Starlink was “losing money.”

SpaceX’s new government satellite network, Starshield, is expected to help inject money into Starlink, according to analysts and industry experts.

The extra cash is crucial given that Musk has spoken about how Starlink was losing money and burning through $20 million per month to run the service in Ukraine during the war.

Elon Musk’s SpaceX announced Starshield on its website in early December, but has given no further details about the network. What is certain is that Starshield is intended to “support national security efforts” and will use Starlink technology.

Starshield, which is specifically for governmental use, will provide a means of financially boosting Starlink, experts in the satellite industry told Insider.

“Starlink needs to start earning some money,” Bill Ray, vice president analyst at management consulting firm Gartner, told Insider. 

He said Starlink needs between five and 10 million customers to be viable. SpaceX recently said Starlink has more than one million active subscribers worldwide. But Ray believes that isn’t enough.

“They need to ramp up very quickly. And if that means government customers, defense customers, yeah, absolutely,” Ray said. He said Starshield would be “an alternative revenue stream for Starlink” but it was “hard to say how much.”

Similarly, Edward Oughton, assistant professor of data analytics at George Mason University, told Insider Starshield would help generate extra streams of revenue.

“Starshield will be another SpaceX offering to utilize the launch vehicle capabilities that have been developed over the past two decades,” Oughton said.

On top of customer subscriptions that cost around $710 each upfront, Starlink receives funding through government contracts. The company landed a $2 million Air Force contract in August to provide Starlink in Europe and Africa, but was rejected $886 million in US subsidies by the Federal Communications Commission around the same time.

More recently, SpaceX asked the Pentagon to foot the bill for operating Starlink in Ukraine because the company couldn’t afford it, per CNN. SpaceX executives have also noted how Starlink terminals cost around $1,500 to make, but the company sells them for significantly less, at $499.

The big question is how much of a “cash cow” government-targeted products such as Starshield are, according to Brad Grady, research director at consulting firm Northern Sky Research.

“Starlink economics are hard to predict,” Grady said. He added that providing satellite connectivity for governments and military is “a growing opportunity” and is expected to be worth more than $90 billion over the next decade.

“The best way to maximize the returns from these customers is through a tailored, focused product offering,” he added.

SpaceX didn’t immediately respond to Insider’s request for comment.

Read the original article on Business Insider