WEBVTT - Amazon Is Spending $10 Billion in Challenge to Musk's Starlink

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Steneveek on Bloomberg Radio. When it comes to providing satellite

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<v Speaker 1>internet from low Earth orbit, pretty much everyone knows about Starlink.

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<v Speaker 1>It's the SpaceX company that for years has been launching

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<v Speaker 1>thousands of tiny satellites into space, and that provides connectivity

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<v Speaker 1>in deserts, war zones, oceans, kind of anywhere that people

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<v Speaker 1>can't really get a high speed Internet connection. There's another

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<v Speaker 1>game in town, though, and it comes from none other

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<v Speaker 1>than Amazon. Project Kuiper, as it's called, is an enormous

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<v Speaker 1>undertaking in an arena that has had more bankruptcies than

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<v Speaker 1>successful businesses. Matt Day is technology reporter for Bloomberg News.

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<v Speaker 1>He spent months reporting this deep dive in Amazon's a

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<v Speaker 1>secretive project and got some amazing access. He joins us

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<v Speaker 1>from our Seattle bureau this afternoon. First of all, Matt,

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<v Speaker 1>congratulations on what I know has been the culmination of

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<v Speaker 1>a huge undertaking. What exactly is Project Kuiper?

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<v Speaker 2>So Kiper, like you said, it's never to challenge Starlink,

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<v Speaker 2>but it's nefer to pride dis An alternative to Internet

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<v Speaker 2>acts as options for folks who you know, don't have

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<v Speaker 2>broadband handy. You mentioned cruise ships, airplanes. You know, there's

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<v Speaker 2>an entire industry already built to serve those those constituencies.

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<v Speaker 2>Amazon thinks they've built a better mouse trap here that

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<v Speaker 2>can deliver it better.

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<v Speaker 1>From low Earth orbit, better than starlink.

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<v Speaker 2>They think, so theo they don't really break out their

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<v Speaker 2>competitive stats by name another Amazon intrate to not really

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<v Speaker 2>talk about their competition. They clearly do think that they've

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<v Speaker 2>got a more powerful set of satellites. You know, Starlink

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<v Speaker 2>originally was set up with kind of a minimum viable

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<v Speaker 2>satellite product. Their early iterations were just real, real basic satellites,

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<v Speaker 2>basic communications satellites. And Amazon, you know, clearly is trying

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<v Speaker 2>to invest in a more powerful device.

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<v Speaker 1>Isn't Amazon a little late to this? After all, starlink

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<v Speaker 1>has the mind share. Certainly they've done this from war zones.

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<v Speaker 1>They have the SpaceX rockets to actually get the satellites

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<v Speaker 1>into orbit. Why does Amazon think that they can maybe

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<v Speaker 1>build a better mouse trap but actually catch up to

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<v Speaker 1>what SpaceX has done over the past few years.

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<v Speaker 2>Yeah, you're right. They may never catch up to SpaceX

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<v Speaker 2>when it comes just raw count of satellites but I

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<v Speaker 2>think what Amazon is banking on here is that there's

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<v Speaker 2>not going to be a single winner. I mean, you

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<v Speaker 2>certainly look in the last year for headlines about folks

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<v Speaker 2>who want to reduce their reliance on Starlink or SpaceX

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<v Speaker 2>or just Elon Musk broadly speaking. So I think Amazon,

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<v Speaker 2>you know, though they haven't put this in the marketing materials,

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<v Speaker 2>they're likely to get a whole lot of mileage out

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<v Speaker 2>of the fact that they're just not an Elon Musk company.

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<v Speaker 2>There's an alternative out there if Amazon does its job

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<v Speaker 2>in the next couple of years, that'll be available around

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<v Speaker 2>the globe. Well.

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<v Speaker 1>Elon Musk likes to talk about Starlink actually connecting the world,

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<v Speaker 1>but I'm wondering about Amazon's motivations for Project Kuyper. There

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<v Speaker 1>have been many, many different huge tech companies, members of

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<v Speaker 1>the Magnificent Seven in fact, that have tried to connect

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<v Speaker 1>the world because their business models depend on it. I

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<v Speaker 1>mean remember Internet Essentials from Facebook now meta platforms just

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<v Speaker 1>years ago trying to get the people who were not

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<v Speaker 1>connected to Internet on the Internet just so they could

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<v Speaker 1>go to go on Facebook and be advertised to on Facebook.

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<v Speaker 1>What's Amazon's motivation here.

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<v Speaker 2>So it's definitely similar to what ad, Facebook and Google

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<v Speaker 2>kicking around internet. You know, all of their businesses depend

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<v Speaker 2>on the Internet, whether it's the retail site and video streaming.

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<v Speaker 2>But the kind of secret weapon that I think we

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<v Speaker 2>haven't really figured out how it's going to play into

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<v Speaker 2>is Amazon Web Services. Amazon is the largest cloud computing company.

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<v Speaker 2>They handle data and business software for thousands of companies.

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<v Speaker 2>Nobody else in the cloud can also deliver you Internet

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<v Speaker 2>from space, which is what Amazon's going to be able

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<v Speaker 2>to do in a couple of years. So I think

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<v Speaker 2>that's a real wild card in terms of this giant

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<v Speaker 2>business software franchise that they've built up over the last

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<v Speaker 2>couple of decades. Is Amazon will be the entire package,

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<v Speaker 2>not just delivering you kind of online services, but especially

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<v Speaker 2>for business customers doing disaster recovery, doing connectivity all over

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<v Speaker 2>the world at mines, cruise ships, or mote sites, that

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<v Speaker 2>kind of thing.

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<v Speaker 1>And these are areas of the world that you know,

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<v Speaker 1>can't get wireline broadband Internet access to satellite is kind

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<v Speaker 1>of the next best option, that's.

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<v Speaker 2>Right, And that's a good note of caution on this

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<v Speaker 2>that Amazon is competing not just against Starlink, but against

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<v Speaker 2>every telco around the world that is investing. You know,

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<v Speaker 2>it's hundreds of billions a year they pump into their networks.

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<v Speaker 2>So that's one of the things that felled earlier sets

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<v Speaker 2>of Internet from space aspirants is that, you know, telcos

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<v Speaker 2>are just good at their jobs. Sure there's some pockets

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<v Speaker 2>where they're not going to connect maybe ever, but you know,

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<v Speaker 2>they're always refining their networks.

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<v Speaker 1>How much of it competitive advantage does SpaceX have given

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<v Speaker 1>that they actually own the rockets that get these Starlink

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<v Speaker 1>satellites into orbit, whereas Amazon has to rely on someone

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<v Speaker 1>else and that's not necessarily Blue Origin.

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<v Speaker 2>That's right. Amazon has been really hampered by the fact

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<v Speaker 2>that there is not a whole lot of non SpaceX

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<v Speaker 2>rocket launch available. Amazon as the biggest commercial launch deal

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<v Speaker 2>in history on its books, but their problem is the

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<v Speaker 2>biggest providers of launch in the United States and in

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<v Speaker 2>Europe are between rocket vehicles right now, so they're flying

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<v Speaker 2>untested stuff. It's going to take a while. Amazon hoped

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<v Speaker 2>to have some satellites in orbit about a year ago,

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<v Speaker 2>so they're definitely chasing Starlink, and we saw that they

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<v Speaker 2>you know, kind of admitted to that fact. Recently and

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<v Speaker 2>signing a deal with SpaceX for a few launches on

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<v Speaker 2>their Falcon nine rockets starting in twenty twenty five.

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<v Speaker 1>Keep your friends closer and your enemies closer. I guess Hey,

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<v Speaker 1>let's talk a little bit about Blue Origin, just from

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<v Speaker 1>the perspective of this being a corollary maybe between SpaceX

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<v Speaker 1>and Starlink. Could Blue Origin ever serve as a launch

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<v Speaker 1>vehicle for Project Kuiper?

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<v Speaker 2>Oh, they are, They're already on the list. I think

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<v Speaker 2>Kiper has something like twelve launches on Blue Origins nukelen rocket,

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<v Speaker 2>which is supposed to be a massive medium or heavy

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<v Speaker 2>lift vehicle. The problem there is Blue Origin is years

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<v Speaker 2>behind bringing that to market. You know, we haven't seen

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<v Speaker 2>the assembled rocket. Blue Origin has never sent anything to

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<v Speaker 2>orbit before. So Blue was absolutely one of the launch

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<v Speaker 2>providers at Amazon's opened to rely on, but they've kind

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<v Speaker 2>of gotten let down by that other Jeff Bezos company.

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<v Speaker 1>Hey, Matt, can you talk a little bit about reporting

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<v Speaker 1>out this story and the access that you got speaking

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<v Speaker 1>to people such as Dave Limp, somebody who's been at

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<v Speaker 1>Amazon for years at this point and has had his

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<v Speaker 1>hand in many different parts including hardware.

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<v Speaker 2>Yeah, you mentioned Dave imp started at Amazon working on kindles.

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<v Speaker 2>He's an old Apple guy, and then suddenly it was

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<v Speaker 2>bizarre to find myself talking to him about space topics.

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<v Speaker 2>He's talking about rocket launches and payload fairings and all

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<v Speaker 2>this technical stuff. But Amazon's really developed an expertise in

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<v Speaker 2>that you can go out and check out there as

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<v Speaker 2>I did. I guess you can't, but I did check

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<v Speaker 2>out their R and D facility and suburban Seattle, and

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<v Speaker 2>they built you know, impressive machining shop and they've got

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<v Speaker 2>you know, antenna testing going on and all this stuff

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<v Speaker 2>that you just would not think would be anywhere close

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<v Speaker 2>to Amazon's you know, core competencies. But if you're willing

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<v Speaker 2>to spend ten billion dollars in back a satellite venture,

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<v Speaker 2>I guess you can. You can find your way there.

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<v Speaker 1>Does it seem like Amazon has been able to make

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<v Speaker 1>the hires? I mean this, the type of talent that's

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<v Speaker 1>that's out there, that is, you know, knowledgeable about this

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<v Speaker 1>stuff is certainly in high demand right now. And they're competing,

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<v Speaker 1>you know, not just you know down the street with Boeing,

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<v Speaker 1>but they're also competing you know, down from down in

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<v Speaker 1>Hawthorne with SpaceX and then of course with Blue Origin

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<v Speaker 1>as well.

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<v Speaker 2>Oh for sure. In the halls of Kuiper, there's a

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<v Speaker 2>there's a great mix of it's kind of aerospace veterans.

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<v Speaker 2>There's a lot of Boeing people around or Boeing adjacent,

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<v Speaker 2>but there's also a lot of consumer tech vets. There's

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<v Speaker 2>some SpaceX people. They seem like they've definitely put a

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<v Speaker 2>team together that kind of crosses I don't know. I

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<v Speaker 2>call it the new Space playbook, right. You've got a

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<v Speaker 2>little bit of hardcore aerospace, a little bit of commercial

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<v Speaker 2>consumer electronics work to kind of get the manufacturing shops there.

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<v Speaker 2>So it's a bit of an eclectic group they've they've assembled.

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<v Speaker 1>Hey talk to us about Regieve bad y'all and who

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<v Speaker 1>he is.

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<v Speaker 2>As Reegieve runs Amazon's project Kuiper. He's been a tech

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<v Speaker 2>engineering leader forever. Worked at Hewlett Packard back in the

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<v Speaker 2>day doing optical mice, doing inkjet printing, found his way

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<v Speaker 2>to Microsoft, where he worked on Microsoft Zoom the music player,

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<v Speaker 2>also had some roles on Xbox. He was tapped by

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<v Speaker 2>Elon Musk to start Starlink back in twenty fourteen, set

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<v Speaker 2>up the manufacturing line there, got the first couple satellites

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<v Speaker 2>in orbit, and then in a flash, Elon flies up

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<v Speaker 2>to Seattle and the leadership team is gone. And so

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<v Speaker 2>suddenly Rejieve and a bunch of his pals are looking

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<v Speaker 2>for work. Amazon had in hand at that point of

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<v Speaker 2>plan to deliver satellite internet and there's a management team

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<v Speaker 2>looking for something to do. So, you know, a few

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<v Speaker 2>years later, he's got sixteen hundred people under him at

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<v Speaker 2>Amazon and he's having another crack at building a satellite constellation.

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<v Speaker 1>Well, Matt, it's just a really fantastic story. We got

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<v Speaker 1>ten seconds left. Do you think Project hyper can be?

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<v Speaker 1>Just based on your opinion, you're reporting a viable competitor

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<v Speaker 1>to SpaceX.

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<v Speaker 2>If they figure out manufacturing, they can do it. But

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<v Speaker 2>that's a really big if.

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<v Speaker 1>Manufacturing. I mean Elon Musk is working on manufacturing that

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<v Speaker 1>cyber truck right now, and doing anything at scale is

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<v Speaker 1>in this space is just really really tough stuff. Hey, again,

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<v Speaker 1>a fantastic story. I encourage everybody to go check it out.

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<v Speaker 1>It's among the most red on the Bloomberg terminal today.

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<v Speaker 1>It's at Bloomberg dot com as well. Amazon is spending

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<v Speaker 1>ten billion dollars in challenge in a challenge to Musk's

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<v Speaker 1>Starlink Mad Day technology reporter for Bloomberg News