Space remains the final frontier, but a growing number of organizations large and small are beginning to find ways to exploit the vast expanse beyond Earth's atmosphere. According to the United Nations Office for Outer Space Affairs, there are nearly 5,000 man-made objects now in orbit, with almost 300 of them launched in 2018.
While getting satellites into orbit is cheaper than ever, it is still a difficult and expensive endeavor to communicate with and collect data from them. That is about to change. Just as Amazon (NASDAQ:AMZN) Web Services (AWS) helped revolutionize cloud computing, offering pay-as-you-go access to data centers that eliminates the need to build them in-house, the company recently announced a new service: AWS Ground Stations for the burgeoning satellite industry.
Wait, what's a ground station?
It's all about data logistics. Satellites serve a multitude of purposes, from facilitating voice communications and video broadcasts to weather forecasting and surface imaging. But they don't operate in isolation: The hardware in orbit must have counterparts in Earth-based facilities. AWS describes it this way:
Ground stations are at the core of global satellite networks ... [they] are facilities that provide communications between the ground and the satellites by using antennas to receive data and control systems to send radio signals to command and control the satellite. Today, you must either build your own ground stations and antennas, or obtain long-term leases with ground station providers, often in multiple countries to provide enough opportunities to contact the satellites as they orbit the globe.
Amazon's intent is to build out its own network of ground stations -- 12 will be complete by mid-2019 in strategic locations around the globe -- to download, store, and transport data from satellites. Use of the ground stations will be rented out on a pay-as-you-go basis. Amazon says satellite operators could save up to 80% by using AWS Ground Stations compared to constructing and operating their own facilities.
Amazon and outer space are a natural fit
Amazon isn't exactly a newcomer to space ventures. CEO Jeff Bezos founded the space flight company Blue Origin, and AWS itself recently added satellite communications provider Iridium Communications (NASDAQ: IRDM) to its partner network. AWS and Iridium are working on a new cloud-based service utilizing Iridium's network, which they tout as offering Internet of Things connectivity across 100% of the globe.
AWS Ground Stations are an even more ambitious endeavor -- an entry into the space hardware business. The move makes perfect sense, though, as it essentially extends AWS' range into the outer reaches of Earth's atmosphere, giving enterprises another reason to choose Amazon over its cloud competitors. And AWS is arguably the main driver of Amazon's bottom line these days. Through the first nine months of 2018, AWS sales made up just 11% of total revenue, but contributed 59% of total operating profit.
That segment is also the company's fastest-growing, notching a 48% year-over-year increase for the first nine months of 2018. If Amazon can replicate in the satellite business the type of success AWS has had thus far in the cloud, it could become another big contributor to its bottom line.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Nicholas Rossolillo and his clients own shares of Iridium Communications. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.