Deja vu all over again?

Posted in Financials, Handheld, Iridium, Operators, Services, TerreStar at 10:42 pm by timfarrar

When I read this review of the TerreStar Genus phone, not only did it confirm my own views about the limited prospects for the phone and the wider lack of interest in dual mode satellite phones, but it brought back quite a few memories from the late 1990s.

Most notably, likening a satellite phone to a “brick” is never a good sign (“It’s huge! It will scare people…If we had a campaign that featured our product, we’d lose“).
Also the suggestion that AT&T hasn’t identified the market correctly if it thinks people will use this as their “everyday mobile device”, along with criticism of the “hefty series of price tags” (“What it looks like now is a multibillion-dollar science project. There are fundamental problems: The handset is big, the service is expensive, and the customers haven’t really been identified“)


  1. flatcat said,

    September 30, 2010 at 12:00 pm


    The line “everyday mobile device” doesn’t mean “for every market”. It is listed in the ATT section that makes it clear that the the phone is designed for business continuity and first responder customers – a small subsegment of the overall market, but an important one to the satellite community.

    While I wouldn’t expect to see an average consumer walking around with a Genus phone, the ability to “add on” satellite coverage to a phone that performs reasonably well as a cellular phone should still sell several tens of thousands over the next year if ATT business sales puts any effort behind it.

  2. ORBITRAX said,

    October 2, 2010 at 12:45 pm

    It is indeed interesting to see the failure of lessons learned in the MSS marketplace, being duplicated yet again. If we combine two of the most basic lessons totaling over 7 Billion dollars in lost investment monies between Globalstar and Iridium. Those would be, the majority of customers want a single mode satellite phone, and the “wholesale” business model does not work in mainstream MSS applications.

    Globalstar handed the keys to Vodafone/Airtouch for retail and Service Provider operations to disastrous results in North America, while Globalstar continues to attempt to unwind retail control for many of the wholesale partners and Gateway owners (IGO’s) established more than 10 years ago. Both Iridium and Globalstar promptly either removed (Globalstar), or the option to add (Iridium) terrestrial functionality from their respective second-generation handsets.

    As an illustration, most of the less than flattering remarks provided by the reporter of the Dallas Morning News were centered on the phones form and functionality as a “terrestrial cellular replacement”. If the phone had been “satellite only”, I doubt the report would have been as critical. To highlight this differentiation. The Delorme/SPOT communicator was recently awarded the Popular Mechanics Breakthrough Award for 2010. Here a bulky two piece Handheld GPS with a External SPOT Simplex data modem connected via Zigbee, which enables short one-way text messages via satellite when outside of cell-coverage took one of the ten awards for Breakthrough technology. Other recipients were Qualcomm Snapdragon, and HTC EVO 4G. ORBITRAX authors have maintained over the last year that the addition of terrestrial functionality to the Genus™ phone would be an overall detriment from the satellite functionality. Which even the satellite mode performance appears far below the advertised data rates to handheld devices. Perhaps even approaching Globalstar’s first-generation 9.6kbs rates given the data provided by the reporter.

    ORBITRAX contacted the reporter in question and verified the exact location of the phone testing as near Irving, Texas. Given the latitude and longitude of Dallas in comparison to the contours of the Terrestar-1 satellite. This location should have provided nearly optimum link margin to the satellite. Thus, the performance from latitudes and longitudes further from the axis of the satellite could deteriorate even further from the performance levels reported in Dallas. This after nearly a year of testing, tweeking the ground network, with the cooperation of SS/Loral, Hughes, and even a complete reformulated Genus™ phone from Elektrobit recently approved by the FCC OET.

    At some point, you might begin to draw a line between the apparent problems Skyterra is having with it’s 22-meter L Band mesh antenna that was unceremoniously ripped off the Skyterra1 satellite in early 2010, and returned to it’s manufacture as perhaps the possible causes for Terrestar’s apparent technical issues. After all, there appears to be significant differences between the link margins modeled under simulation during design, and those provided when on-orbit. After one year, perhaps Terrestar came to the conclusion that it is the best it’s going to get with what they have to work with. Perhaps there is a dreaded “external antenna” requirement in the future of the Genus™?


  3. timfarrar said,

    October 3, 2010 at 7:57 pm

    Let’s hope that AT&T business sales does put some effort behind it. I don’t disagree that in these circumstances (if it works and is marketed properly – never a foregone conclusion) up to “several tens of thousands” of phones could be sold (just like Iridium did in their first year). However, why on Earth is AT&T suggesting that the phone will be in retail stores later this year (http://www.usatoday.com/tech/wireless/phones/2010-09-21-satellite-phone_N.htm)? That strikes me as exactly the same disastrous blind alley as Iridium and Globalstar went down in the late 1990s – pushing a highly specialist sale through retail channels that might sell one of these phones a month if they are lucky (~2000 AT&T stores x 12 months = 24K phones and that’s ignoring the fact that many sales would be through separate business and government channels).

    Its also worth noting that as I understand it, these phones are being sold well below TerreStar’s cost for the first production run (I’m told ~$1000 per phone), so if TerreStar gets 50% of AT&T’s incremental revenue (say 50% of $30-$40 per month) its probably going to take them more than a year just to cover the loss on the wholesale selling price of the phone, let alone make any money to keep the company in business.

  4. craigvanwagner said,

    October 6, 2010 at 5:22 am

    Terrestar – A Harvard Business Review Classic on Finance and how “Build it and they will come” does not work. Terrestrial cellular 3G/4G services and products are evolving so rapidly that having a dual mode (cell – sat) phone like this will not encourage the necessary take ups and revenue to support a company or ongoing service. You have to look at the math (like Tim has) and understand that TSTR will never make a profit. The company’s value is purely the spectrum. Everybody is flocking to the iPhone and similar products for their breadth of apps and functionality. For those that want or need that satellite component, they should just get an Iridium, Inmarsat or Globalstar (when their constellation is re-energized) and have that as an add on. Article should be titled “Day Late & MANY Dollars Short”

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