By James Careless
Even though the global satellite industry is performing stronger today than in recent years, the numbers for 1Q 2005 were not as robust as executives would have liked, and as it always happens when the market experiences financial challenges, satellite executives are now embroiled in self-analysis, trying to figure which market segments, applications and business strategies will make the balance of 2005 stronger on both their financial and strategic business plans.
Adding to the pressure are the new managers on the satellite scene. One has to wonder "how the newly acquired and about-to-be-acquired satellite companies will fare under the harsh financial glare of the private investment groups that have bought them," says Susan Irwin, president of Irwin Communications in Washington, D.C. Given that private investors usually have little patience for losses, "will these companies be carved up and sold off in pieces, or will they be maintained with the same structure and management they have had?"
Only time will tell. Still, those who did their 'due diligence' before buying into the satellite communications arena know that the past few years have not been easy for the industry.
Notwithstanding, satellite executives are once again taking stock of their strategies and what can be done to make this year's remaining quarters more profitable. The good news is that there are sectors of the satellite market that are performing well and whose prospects make them worthy of consideration by new players.
One of the industry's brightest lights is the private networks sector. "We are seeing a growing demand for low-cost multi-site broadband terminals that support native IP applications such as IP/VPN, VoIP and videoconferencing," says Steve Corda, vice president of business development for SES Americom. "Awareness of broadband at the consumer level is driving demand in the enterprise world for greater connectivity at every remote site."
"Broadband satellite is unlocking value with as many dimensions as organizations have missions and people have personalities," adds Arunas Slekys, vice president of global marketing for Hughes Network Systems. "From digital signage to boost retail sales to delivering USA Today instantly; to multicasting media rich infotainment to movie theaters nationwide; to Wi-Fi via satellite, enabling wireless capture and transmission of findings at archeological digs to our homes, for high-speed surfing, distance-learning and downloading of songs and videos."
"There is also integration of point-of-sale and other traditional applications supported over satellite with other back office functions and business connectivity needs; virtual private networking at the enterprise level, and IP video (corporate, learning networks and commercial programming)," adds Corda. "As well, thin route client server applications are a common choice (that is SAP/Citrix); so are turn-key VPN networks, providing global connectivity to multi-national corporations over VoIP, and the provision of VoIP services to deregulated African countries."
There are a number of factors driving the growth of leading-edge private networks, chief of which is old-fashioned competition. "These applications have become more popular as businesses are striving to find new and creative ways to stay competitive, improve efficiencies and target consumers," says Jeff Carl, Spacenet's director of marketing. When sent over satellite, "the latest multi-media service applications offer unique solutions that enable customization, content management, and can be easily deployed to multiple sites."
Falling prices combined with higher data speeds are also driving "the rapid acceptance of broadband satellite terminals," Corda says. "Another exciting development is the massive movement at the enterprise level toward IP-based applications. Everyone is speaking the same language, and Web-based applications, portals and meetings are making the telecommuter's laptop as powerful as a data center workstation -when connected to broadband."
Finally, money talks: private network broadband via satellite is proving a real return on investment (ROI) for businesses using this technology. "Whether it is improving cost-efficiency or productivity, or uplifting sales, broadband investment improves the bottom line and, for consumers, makes life better," says. Slekys.
As for the future of private network sales, "satellite's fundamental advantages of ubiquity and multi-casting make its business case superior over terrestrial alternatives," he replies. "More demand for video transport in virtually all applications will continue to fuel that advantage. The net result is both expanded and as yet untapped market opportunities for satellite."