GOing to FIght about it?

Posted in Globalstar, Handheld, Inmarsat, Iridium, Operators, Services, Thuraya at 4:20 pm by timfarrar

Last week, at its partner conference, Iridium announced the launch of its new GO! product, which will provide the ability to relay calls and data to and from a smartphone via WiFi, at a reported retail cost of $700-$800. Iridium is looking to boost its revenues from handheld data (i.e. email, texting, etc.) which to date have been fairly modest in the satellite phone market, and will offer lower cost bundles of data minutes, including unlimited packages for intensive users. Indeed, one of the likely use cases is on yachts and fishing boats, which don’t need a full blown high speed data solution. This is slightly different to Thuraya’s SatSleeve, which is more likely to stimulate incremental voice usage, because the SatSleeve is physically attached to an iPhone or Samsung S3/S4 phone and so is easier to use for voice communications.

Globalstar also threw its hat in the ring, pre-empting Iridium’s announcement with the Sat-Fi, which is “expected to receive final FCC certification…during the second quarter of 2014, with shipments starting shortly thereafter.” Globalstar has had a “puck-like” device on its roadmap for several years, but has always wrestled with whether it is worthwhile to invest in product development for a product based on its existing Qualcomm air interface, with a potentially limited lifespan, or if it is better to wait for the new Hughes chipsets in 2015, which will offer improved data capabilities and will be supported throughout the lifetime of the second generation constellation.

Its therefore interesting to note that (according to my sources) the Sat-Fi will be based on the Qualcomm GSP-1720 voice and data module rather than the Hughes chipset. This suggests that Globalstar either perceives a large near term opportunity, which would justify making the investment now, or was particularly focused on spoiling Iridium’s announcement. Iridium clearly thinks it was the latter, and doesn’t believe that the Sat-Fi is actually “real”.

Globalstar has kept details of the Sat-Fi pretty quiet (although it filed a patent application on some aspects of the concept two years ago), and none of the MSS distributors I’ve spoken to seems to know much about the size, price or market positioning of the Sat-Fi device. However, despite Globalstar’s greater focus on the consumer market, it does not appear likely that Sat-Fi would sell in significantly higher volumes than Globalstar’s existing satellite phones, assuming a comparable price point. Indeed estimates that there might be 150K hotspots in use by 2022 would represent only 10%-20% of the expected satellite phone market in that timeframe.

I’m sure this will be make for a fascinating discussion during the MSS CEO panel at Satellite 2014 and perhaps even a return to some of the contentious debates of prior years. Ironically, the barbs being thrown around over the GO! and Sat-Fi don’t fully reflect the competitive landscape in the MSS industry, with Iridium and Globalstar focusing to a significant degree on different distribution strategies, target customers, and (to some extent) geographies.

In that context, both could be successful in different parts of the market, which would make this much like prior arguments over Inmarsat’s ISatPhone Pro and its supposed advantages over Iridium (reflected in the Gabby Wonderland video produced by Inmarsat’s marketing agency in 2010). In that case Inmarsat’s initial belief was that the ISatPhone Pro would hurt Iridium’s satellite phone business significantly, but in reality Iridium continued to dominate the higher end of the MSS handheld market (and sold more satellite phones than Inmarsat at much higher equipment margins), while Inmarsat expanded the low end of market instead.


  1. ORBITRAX said,

    February 10, 2014 at 6:42 pm

    Although the GSP-1720 has been out of production for nearly 7 years. I believe they do have stock on-hand of over 40,000 units, and Qualcomm had substantial additional inventories available to Globalstar via the original production contract. Several years ago when on a tour of the Covington offices, I happened into Walter Debus’s office. While others in the group became engaged in a conversation, I noticed a GSP-1720 on his desk with a daughter board with an antenna and some additional circuitry. I picked it up and said look. A GSP-1720 with a Wi-Fi module attached. The Globalstar guys all looked at each other and nearly turned white. I was never allowed to go back in Debus’s office again. The difference between Iridium and Globalstar here is the fact that Globalstar has substantial inventories of the modem that was paid for years ago, but they have been unable to monetize, while Iridium’s product will be a direct cost to Iridium to manufacture.

    Qualcomm gave Globalstar the Lusk Blvd Testbed Gateway and all the spare parts in 2012, but not sure of the remaining product inventory. Globalstar received Permits from City of Milpitas to install the test bed gateway in the Milpitas parking lot in 2012. so that should be under construction as we speak.

    This year perhaps Monroe can tell Desch..”“If you need the money, I can get it to you. I understand you need the money.”

  2. timfarrar said,

    February 11, 2014 at 8:35 am

    I thought you were convinced that “This device will use the new Hughes Chipset and RAN’s“?

    Undoubtedly having the GSP-1720 boards available will help reduce the cost of building the Sat-Fi product. But according to the Q3 conference call, Globalstar is receiving about $360 for each $499 (retail) handset sold into the distribution channel, which is equal to their original cost of production. Maybe re-using the old board cuts $100-$150 off the $360 cost for a new Sat-Fi? Maybe the Sat-Fi is a bit cheaper than a handset to build (depending on whether it has much of a user interface on the device or not)?

    But none of that suggests the retail price is going to be below $350-$400, and I’d guess that Globalstar would actually prefer to make some margin (where possible) in order to keep their EBITDA heading in the right direction. After all the SPOT Gen 3 is currently listed at $149 not $99, albeit with regular promotions. So a retail list price of $499 for Sat-Fi seems likely to me.

    I think the real question is how much NRE will be needed to produce a Qualcomm-based Sat-Fi, and how many units can be sold before a transition to the Hughes chipset. If Globalstar sold 20K units this year and 30K next (which assumes plenty of availability in time for the 2014 summer season so is a “stretch” target) and spent $5M on development, that would be $100 of NRE per device. Alternative assumptions could push the NRE over $200 per device.

    Its hard to know exactly how much investment will be required, but several of the capabilities they’ve promised, such as the use of “existing phone numbers to send and receive communications over the Company’s satellite network” are very challenging (and therefore costly) features to implement, especially if you have multiple devices connected to the Sat-Fi simultaneously.

    So it will be interesting to see if the Sat-Fi is going to deliver a decent ROI in the near term or if this is more about responding to Iridium’s plans. After all, the press coverage treated Iridium and Globalstar’s devices as essentially equivalent in terms of both functionality and availability, so from that perspective the Sat-Fi press release itself can certainly be considered a success for Globalstar.

  3. the keyboard of geoff goodfellow said,

    February 11, 2014 at 10:56 am

    “Jay Monroe, CEO of Globalstar, talked to Via Satellite’s Editor, Mark Holmes, at the World Satellite Business Week 2013 in Paris, France” — in September last year about a product they are going to bring to market “in about 18 months time” — in this ~5 min interview at http://www.youtube.com/watch?v=2fhgH9vAqsw

    In the dialog — at the ~50 second mark — Jay stated “Globalstar’s objective is to produce a product for $100 in the retail channel unsubsidized”.


  4. timfarrar said,

    February 11, 2014 at 11:21 am

    Yes, the planned “product for $100″ is a Hughes-based device, which is expected in 2015, not this year. The chipset will be voice and data-capable, so this product should be able to replicate the functionality of the Sat-Fi and improve the data speeds.

    As I said, the conundrum has always been whether to wait for the Hughes chipset, which can support smaller, cheaper and more capable devices, or invest additional money now in a larger, more expensive, less capable Qualcomm-based product and then phase it out (or just sell it in regions with no Hughes-equipped gateways) in a year or two.

    Fundamentally, that’s why some (e.g. competitors) have doubts that the Sat-Fi will materialize this year. For example, it wouldn’t be inconceivable for Globalstar to say that FCC certification (or other) delays have caused them to rethink the schedule and they have decided to wait and launch an improved Hughes-based product in 2015.

  5. the keyboard of geoff goodfellow said,

    February 11, 2014 at 12:28 pm

    Why oh why always seemingly soooooo non-positive, Tim? Oh, right… you/we “lived” though the First Incarnation of these crash and burn “enterprises” (some of us on The SHORT SIDE, against all odds, at the time… :D )

    The World and The Opportunity is just soooooo different now… Fundamentally, that’s why some of us (e.g. This LONG) has NO doubts that the Sat-Fi and Globalstar’s consumer oriented focus WILL really materialize and bloom this year and years forward AND SELL IN ABUNDANCE!

    Don’t you recall Thruaya’s CEO statement last year [on your MSS CEO's MSUA panel?] that their SatSleeve first production block of 5,000 units sold out within the first days of its release… and it didn’t even do data, only voice and text/sms!

    Positively Optimistic (and quite LONG) on Globalstar and the opportunity in front of us/at play as MSS transitions to The Consumer Market place/space with faster, better and cheaper products and services (just as CMRS did),


  6. timfarrar said,

    February 11, 2014 at 12:53 pm

    But the last couple of years have basically shown that the hoped-for consumer-led breakthrough for MSS M2M (e.g. SPOT, inReach) is much smaller than expected (hundreds of thousands, not millions of units).

    I sat through a presentation from a wireless analyst last week who projected there would be 17M MSS terminals in the transportation sector by 2022. Unfortunately the analysis was basically “if you just get 1% of this huge terrestrial market then that will be a great business”.

    All the MSS people in the room just sat there and thought back to the 1990s…

  7. the keyboard of geoff goodfellow said,

    February 11, 2014 at 3:28 pm

    but Tim… that’s Just The Point!

    this/now/today is 2014… NOT The Zero Billion Dollar Industry days of the 90′s of MSS past when Christopher B. Galvin called Iridium “the eighth wonder of the world”…

    wouldn’t you agree, OR at least give some/any/an iota/sub-atomic particle of credence (or even a hat-tip/nod) to Team GSAT for The Well Beyond Yeoman’s Duty at:

    first turning a Lemon — a “half-failed” first generation constellation of SS/L satellites — into Lemonade when the S-Band downlink equipment pooped out (due to inadequate space radiation shielding) with their lean and mean hungry as a junk yard dog approach to growing/iterative refining/maturing in The Market place Simplex Line of SPOT products and service offerings?

    secondly, please recall that it was just the last week of August of last year — that GSAT’s second generation (which was 2+ years late — and no fault of their own) went into full service/operation?

    AND MOST UNLIKE the ra-ra thousands of dollar$ VOICE HANDSETS days of the 90′s build it and they will come Engineering (coupled with Pipe Dream/What Are You Smokin’) Driven Mentality — i.e. “this is a `solution’ looking for a `problem’ — where there was not Serious Thinking as to The Actual Demand as well as The Demographics of the prospective customers (AS WELL AS THEIR ABILITY TO PAY (for the User Terminals as well as to in outer space pricing of the attendant service fees)…

    What the last couple of years in MSS developments/progress/maturation/growing have basically shown THIS LONG investor is that the hoped-for consumer-led breakthrough for MSS M2M is still really just in birthing and teething phase.

    And just as CMRS $4,000 Motorola 8000X DynaTAC’s didn’t fly off the shelves into consumers hands, as things got iteratively refined to be Faster, Better, Cheaper, now everyone has one (or more) of ‘em… :D

    so, Tim, can you PLEASE try to see — just a little — beyond and get out of the 1% “CMRS mentality of the 1980′s” when:

    [as excerpted from http://www.dtic.upf.edu/~alozano/innovation/ ]

    “* Cellular telephony: just a niche market. In 1980, McKinsey & Company was commissioned by AT&T (whose Bell Labs had invented cellular telephony) to forecast cell phone penetration in the U.S. by 2000. The consultant’s prediction, 900,000 subscribers, was less than 1% of the actual figure, 109 Million. Based on this legendary mistake, AT&T decided there was not much future to these toys. A decade later, to rejoin the cellular market, AT&T had to acquire McCaw Cellular for $12.6 Billion. By 2011, the number of subscribers worldwide had surpassed 5 Billion and cellular communication had become an unprecedented technological revolution.

    “* The accidental success of SMS. The short message service was conceived in the 1980’s to alert individual mobile users of network disruptions, deposited voice mails, etc. Few believed it would serve for users to communicate with each other and, in fact, operators where slow to even set up charging mechanisms. (Early on, roaming customers rarely received bills for messages sent while abroad, which made SMS an alternative to voice calls.) Since the late 1990’s, the SMS phenomenon has grown to epic proportions. The average number of monthly messages per user, which was 0.4 in 1995, reached 47 by 2006. The total number of monthly messages worldwide is now well over 100 Billion, at a cost that doubles Hollywood’s box-office and global music sales combined! Second to none in fervor is the Philippines, which single-handedly generates almost 10% of the world’s SMS traffic. Also, the need to convey more while staying within the 160-character limit has led to the emergence of a new communication language that uses abbreviations to save time, space and effort. Anyone can get creative. “Go ahead & GIAG BBFN & TC”. If you are puzzled, it means: “go ahead and give it a go; bye-bye for now and take care”. Opinion is divided on this contortion of language, but it hardly seems to matter to the users.

    “* Cellphone meets computer and they live happily ever after. In 1993, a revolutionary device was launched: a cellphone with touchscreen, email, fax, graphics, and text editor. This first smartphone was not the iPhone, still years away, but the IBM Simon. The idea was visionary, but ahead of its time; technology wasn’t ripe enough yet. With only 1 Mb of memory and Kb/s bit rates, it couldn’t quite deliver. It was bulky and, at $899, expensive. Others followed and developed the concept (the Nokia 9000 in 1996, with 8 Mb of memory, Ericsson’s P800 in 2002, with camera and MP3 player, RIM’s Blackberry in 2003, with a full keyboard). The debate raged among engineers as to whether users really wanted a multifunctional device or they preferred dedicated phones, cameras, audio players, etc.

    “The debate was settled by the iPhone in 2007. With Gbs of memory and Mb/s bit rates, smartphones are finally taking over: 450 Million shipped in 2011 alone. In fact, smartphones are causing a massive surge in wireless traffic, with a 40-fold increase forecasted between 2009 and 2014, of which 2/3 will be video. Two decades later, the descendants of the IBM Simon are fulfilling the dream…


  8. ORBITRAX said,

    February 11, 2014 at 8:45 pm

    Yes, I still believe the product will be based on the SAIC Hughes Chipset. There is no reason not to. If they were going to use the 1720′s.. The product would already be released as they were prototyping it back in 2011. As I understand it. The pre-production Hughes Chipsets have been available for about 3 months, the test-bed gateway is “in process” in Milpitas. And the CoreNetwork testing/simulations have been on-going. As you point out, the feature sets that are described in the Sat-Fi device are simply not available in the current Core Network. Nor would they make the investment into the current core network. There is simply no reason to build it on the 1720 with the new RANS/CoreNetwork about 9 months away. Which means we have to wait for the new Core Network, and the new RANS’s. I was simply stating that they have a large inventory of 1720′s which was the basis of the unit I picked up off Debus’s desk in Covington. Globalstar has always maintained that the the Hughes Chipsets would be priced at around $10. As far as the GSP-1700′s go. Any price above $0 is still money in the bank. I would expect a bit of a fire sale as the launch of the New RANS’s approach’s. I am sure they will run the two RAN’s side-by-side for a period of a year or two to support the old handsets.

  9. timfarrar said,

    February 11, 2014 at 9:38 pm

    Geoff, while I greatly admire Globalstar’s efforts (and Jay’s financial commitment) over the years, I don’t think that the consumer MSS opportunity contributes anything meaningful to the current value of Globalstar or any other MSS operator. So if you and others are investing for that reason then you’ve left me concerned that we don’t just have a “spectrum bubble” at the moment.

    Realistically, though it was certainly a great idea for “making lemons into lemonade”, when measured in terms of the original projections (1.5M subscribers after a “few” years) SPOT has only been marginally more successful than previous generations of MSS services.

    You note that “DynaTAC’s didn’t fly off the shelves into consumers hands” but they did fly off the shelves into plumbers, builders and others’ hands and certainly exceeded Motorola’s expectations. That provided the funding for better and better cellular products. The only MSS product that’s ever exceeded the original expectations consistently is Inmarsat’s high speed maritime product range (A/B/Fleet/FleetBB) and even then, attempts at more consumer-oriented products (F33, FB150) have been pretty disappointing in comparison.

    The real question is what a consumer wants when they buy an MSS product (“coverage everywhere” at least if you are prepared to go outside) and how much are they prepared to pay for it. We can want something but not be prepared to pay for it, if there is a substitute with other advantages (e.g. much cheaper, more convenient, other more valuable functionality).

    The cellphone never had substitutes with a comparable value proposition and a meaningful advantage in functionality or cost (e.g. a pay phone can’t receive incoming calls, unless you are standing right there or make arrangements in advance). So there was plenty of willingness to pay. But the cellphone today has most of the functionality of an MSS device (as coverage improves) and enormous advantages in cost and functionality. So consumers have very little willingness to pay for MSS capabilities. Only professional users, where the capability is “must have” as opposed to “nice to have”, are really prepared to pay for MSS.

    We can see today in the commercial aviation market that consumers aren’t prepared to pay for connectivity everywhere. Only a few intensive business travelers will pay and so take rates are dramatically lower than the original business plans assumed. Occasional travelers are happy to wait for free Internet in the airport (or other connectivity included in their existing cellphone plan).

    In my view the same will continue to be true for MSS. In the SPOT example, if you spend a week or two every summer backpacking in the Sierra, then you’ll buy one. If you go to Yosemite Valley for two days, then you won’t.

  10. timfarrar said,

    February 11, 2014 at 9:42 pm

    “Yes, I still believe the product will be based on the SAIC Hughes Chipset.”

    So there is no GSP-1720 based Sat-Fi product?

  11. the keyboard of geoff goodfellow said,

    February 11, 2014 at 11:53 pm

    jacking in to this conversation thread with some “hard evidence” straight from the horses mouth, er, twitter feed:

    This sure dose NOT sound or seem like the gen1 of the Sat-Fi product (due to be out in Q2 after FCC type acceptance approval) will be based on the SAIC Hughes Chipset and/or operating on the 2nd gen RANs… it seems or sounds rather to be a GSP-1720 based product operating on the extant 1st gen RAN infrastructure at a max of 9.6 kpbs (w/o proxy):


    [however, with the GSAT "Data Express Compression" (proxy) capability/service enabled and active, users typically see a 4x increase in connection speed... so a Globalstar data link can be over 30kbps on the extant 1st gen RAN infrastructure].


  12. ORBITRAX said,

    February 13, 2014 at 9:27 am

    So there is no GSP-1720 based Sat-Fi product?

    I held what appeared to be one in my hands in Covington in 2011. It was very “prototype” It was at this meeting that Paul Monte verified they had received and tested the first prototype Hughes SAIC chipsets. I inquired whether they would require a reSPIN and he indicated that it would not be required. So they have had prototype silicon since early 2011, if you chose to believe Paul Monte? He has always seemed pretty credible to me.

    The Qualcomm Core Networks, deployed in North America and Brazil are still circuit switched ANSI-41 Core Networks. They are unsupported by Qualcomm. You might be able to use the GSP-1720′s for a two-way messaging unit like a Delorme InReach. But, given the functionality list provided and the lack of any functioning business unit within Qualcomm for any R&D. Then, no, I fail to see the viability of Sat-Fi device using GSP-1720 modems. A Two-way SPOT messenger device “Simplex L-Band Out/S-Band Receiver in” with a keyboard or something like that. OK.

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