Inmarsat CEO Andy Sukawaty Evaluates 2010 New Market Strategy
Developing a satellite broadband-on-the-move solution that meets connectivity speed requirements at an economical price point has been a top priority for many mobile operators. Inmarsat CEO Andy Sukawaty has had a busy year expanding the operator’s portfolio and investing in a broadband solution to compete with other next-generation systems on the horizon.
This past summer, Sukawaty’s 2010 business strategy culminated with the order of three Inmarsat 5 Ka-band satellites from Boeing to support the satellite capabilities of its upcoming Global Xpress service, which aims to deliver seamless global coverage and unprecedented mobile broadband with speeds up to 50 megabits per second, to customer terminals from 20 to 60 centimeters in size. In the following interview, Sukawaty discussed the new service, as well as other key sector milestones reached by Inmarsat over the past year.
OC E-daily: What was your strategy in developing Global Xpress?
Sukawaty: We wanted to target the $1.4 billion incremental market opportunity in VSAT services for maritime, energy and government sectors. Our investment in the Inmarsat-5 constellation and Global Xpress will be $1.2 billion over four-and-a-half years, incorporating the fixed cost of the satellites as well as the cost of additional ground network infrastructure, product development, launch services and insurance. All of this will lead up to operations starting in 2014.
OC E-daily: Why did you select Boeing both as a partner?
Sukawaty: Boeing has built over 70 percent of the Ka-band satellites in Orbit. We felt that they were the right choice because of their heritage, low-risk factor and based on what they have been doing with the U.S. Military’s WGS program. Finding a partner was a highly competitive process with four companies competing for this contract. All of them had credible proposals. In terms of minimizing risk on the program, Boeing stood out from that perspective. Boeing has been very active in most of the U.S. government’s major satellite programs, so they were a natural fit. They know the market, so they know how to position this service and customize it in a way that the government customer will find attractive.
OC E-daily: Do you see GlobalXpress a way for you branch out from the enterprise sector to government and military services?
Sukawaty: While GlobalXpress will cater to a wide variety of customers, we actually made the decision that we wanted to expand our focus in defense about three to four years ago. We put more resources into the idea and started looking at potential acquisitions. With managed services playing a bigger role in our business, it was natural for us to look at acquiring a company like Segovia, which we did last May. Initially, Segovia was not on our radar. The way it came on the radar, is that Segovia kicked off a process of either partnering with a bigger company or selling the business.
OC E-daily: With the launch of the IsatPhone Pro this past summer, how do you look to position yourself in the handheld market?
Sukawaty: While I believe that the handheld market is a good one, I think the enthusiasm over the niche opportunity of satellite phones in remote environments is a little more temperate than what others have projected. However, with our distribution and our brand position of trust with government and industrial users, we are very well positioned to jump into the hand portable satellite phone market and take our share of that market. Technology has moved along so we can support it on a GEO satellite with smaller reflectors but still have an extremely robust quality service.
OC E-daily: Why enter the market if you believe the enthusiasm is more temperate?
Sukawaty: We’re hitting the market at an interesting time, because Globalstar has virtually exited the market for two-way, voice handhelds. It will re-enter the market with its new satellites. Globalstar, with its configuration, is more focused on land-based customers. Most of their sales have historically been in North America. With Iridium’s satellite constellation reaching the end of its life and the fact that they haven’t ordered new satellites yet, I think the market is ripe for us to step in and take a decent share of the market with a service that people can invest in and know that it will last a long time into the future.
At the same time, our aspirations are fairly modest. We will be very careful about rolling it out to a select band of distribution partners. We will make sure we have a very solid service in the way it is distributed and that the support is there as well as the voice quality. We will get more aggressive over time in how we market the service.
OC E-daily: What are “modest aspirations?”
Sukawaty: We have set a fairly modest target of 10 percent market share within two years of the service launch, which I think is a realistic expectation. The mobile satellite phone market, or, at least the handheld part, is not growing that fast. It sees mid single-digit growth per year. It is not a market where you see a lot of expansion, but at the same time, there is a lot of churn in the market, so I think there is an opportunity.