Four years ago, Amazon.com (AMZN 3.43%) revealed some big news: To compete with SpaceX and its globe-spanning Starlink satellite network, Amazon would build a satellite constellation of its own, called Project Kuiper. Comprising 3,236 satellites in low Earth orbit, Kuiper was supposed to begin with the launching of two prototype satellites to test the technology in 2022.
That's where the problems began.
Switching horses midstream
Amazon, you see, made a curious choice in picking a launch provider. Instead of launching on a Blue Origin New Glenn rocket -- built by Amazon founder Jeff Bezos' own Blue Origin space corporation -- Amazon would instead launch with an unproven provider, space startup ABL Space Systems, whose rocket had not yet reached orbit.
It still hasn't.
In a move to hurry its project along, Amazon announced last year that it would switch providers for its initial launch of the first two Kuipersats, choosing Boeing (BA 0.25%) and Lockheed Martin's (LMT -0.75%) United Launch Alliance for the mission. Problem was, ULA's new rocket, Vulcan Centaur, also hadn't yet reached orbit and still hasn't.
You can probably guess what happened next.
Switching horses midstream -- twice
Earlier this month, Amazon announced that it is switching horses again. Instead of launching on ULA's Vulcan Centaur rocket, Amazon will buy a launch atop one of ULA's proven Atlas V rockets instead. This latest change pushes Project Kuiper's initial launch up to as early as next month -- as opposed to Q1 2024, which is now looking likely as the first launch of Vulcan Centaur.
Yet Amazon's decision is still curious. Consider: ULA puts the list cost of its cheapest Atlas V model at $109 million. The two Kuipersats that Amazon wants to launch on the Atlas V, however, are probably worth less than $1 million combined. (Similar in size to a SpaceX Starlink, the Kuipersat prototypes are believed to weigh only a few hundred kilograms each, and to cost somewhere between $250,000 and $500,000 each).
Big money for small packages
So why would Amazon pay $100 million-plus to launch less than $1 million worth of satellites?
Well, it's simple: Amazon has been waiting years to get Project Kuiper off the ground. It can't get off the ground, though, until one of its launch partners provides it with a working rocket -- something they've yet to accomplish.
A separate holdup is technological. Amazon won't want to start launching Kuipersats at scale until it's sure its technology works. And it can't be sure of that until it gets a couple of prototypes in orbit and begins testing them. The longer Step 1 takes to begin, the longer Amazon has to wait to start Step 2 -- and the farther ahead SpaceX and Starlink get in this space race.
Amazon, in a word, is impatient. And it's finally lost patience and decided to just buy a rocket that it knows will work, and use that to launch its first two Kuipersats.
What it means for investors
It's hard to overestimate how important this development is for space investors -- and Amazon investors, too.
Amazon.com's Project Kuiper, you see, is expected to singlehandedly change the trajectory of the entire space industry on Earth, simply by virtue of the fact that Amazon is buying up a large percentage of the total rocket-launching capacity of Earth to get its project off the ground.
Last year, Amazon announced that getting its 3,000-odd satellites off the ground will require the services of no fewer than 93 separate heavy rocket launches, including 47 ULA Atlas V and Vulcan Centaur rockets, 18 Ariane 6 rockets from Arianespace Aria (a subsidiary of Airbus (EADSY 0.89%)), 12 Blue Origin New Glenn rockets, and one ABL Space Systems RS1 rocket.
That's potentially as much as a year's worth of rocket launches by SpaceX (which, incidentally, is about the only space company that Amazon is not using to launch its satellites), all being devoted to this single Amazon.com Project Kuiper. What's more, half of these launches need to take place before the end of 2026 in order for Amazon to fulfill the conditions of its FCC license for Project Kuiper. So we're talking something on the order of 15 Amazon launches per year over each of the next three years.
(And for context, 15 launches is more than all the rockets ULA launched over the past two years).
If Amazon succeeds in this ambitious project, it has a chance to keep its FCC license and compete with SpaceX Starlink for control of the global satellite internet business. If Amazon succeeds, it will also essentially monopolize space launches around the world for the next three years, driving up space launch costs for everyone else.
Whether all this happens, though, depends largely on the success of just one $109 million rocket launch of $1 million worth of satellites -- and it could happen next month.
