When Elon Musk travels to the South Pacific next month, he'll be staying at an army barracks not the kind of accommodations the multimillionaire former PayPal owner is accustomed to.
But Musk has good reason for the low-rent surroundings: the first rocket launch of his El Segundo-based startup, Space Exploration Technologies Corp.
The company, better known as SpaceX, will be launching a low-cost rocket from the Marshall Islands called Falcon 1 that will be carrying a small telecommunications satellite built by the Air Force Academy.
SpaceX is the latest company looking to take on the Goliaths of the satellite launch business, Boeing Co. and Lockheed Martin Corp. The idea is to offer rockets that carry payloads of about 1,000 pounds for a fifth of the big boys' launch price, about $6 million versus $30 million.
Musk, a South African native, earned more than $200 million after selling online credit service PayPal to eBay Inc. for $1.5 billion in 2002, and has vowed to bankroll the company to the end a notable pledge given other private rocket companies have failed just as often on the balance sheets as on the launch pad.
Still, the launch next month is a crucial milestone for SpaceX and its success or failure is being closely watched by the aerospace community.
"There's a very real chance of failure," said the 34-year-old Musk. "There's a reason why there's never been a successful truly private rocket developed. It's very expensive, and the probability of things going wrong is very high compared with regular businesses."
But if he's successful, low-cost satellite launches could become big business. Some analysts, in fact, believe the future of satellite and space exploration launches depends on private sector companies.
SpaceX already has eight launches booked by customers. "There are probably thousands of universities, small businesses and institutions that could build their own satellites that they would love to launch," said Marco Caceres, senior space analyst for Fairfax, Va. research firm Teal Group Inc.
SpaceX is expected to deliver savings by its manufacturing and design methods. Its rockets have fewer stages than comparable models, and that reduces the number of "events," such as jettisoning a rocket's segment. With each event or stage, costs and complexity rise, as does the risk of failure.
The company also does all its manufacturing in-house, and 80 percent of its rocket parts are reusable, lowering the costs. Most rockets disintegrate as they fall back into the atmosphere.
While SpaceX is now focused on smaller rockets, perhaps the greatest buzz involves its large vehicle, the Falcon 9, which is scheduled for its first launch in 2007. Musk sees it competing directly with the heavy lifters of Lockheed and Boeing.
The price tag for launching a payload on SpaceX's Falcon 9 is expected to be $27 million to $78 million, depending on payload size and configuration. A launch of Lockheed's Atlas V costs between $138 million and $254 million, while Delta IV launches cost $254 million, according to Encyclopedia Astronautica, an industry Web site.
The satellite market has fallen off since its explosive growth during the tech boom, during which various cellular, cable and other telecommunications satellites were launched. But the U.S. Air Force has propped up the market, agreeing to pay higher prices for the launches.
Earlier this year, Musk noted that the field shrunk even more when Boeing and Lockheed announced that they would merge their launch business into a joint venture.
"Monopolies are not known for lowering prices," Musk said. "They're entirely dependent on the government for their business. And since the government can't buy launches from non-U.S. companies, they're resting on their laurels and jacking up prices to extract as much profit as they can."
Still, Musk conceded he has a long way to go, and that there's a good chance of failure for Falcon I, named after the spaceship Millennium Falcon from the "Star Wars" films. But he said the company will push on.
"It's incredibly important to do something to reduce the cost of access to space, or we will never be a space-faring civilization. It's much more of an exciting future if we can have self-sustaining civilizations on other planets than if we're forever confined to Earth," he said.
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